Good day! The week got off to a slow start on Monday, but last week's free-falling commodities were once again the highlight of the session. Albeit this time the mood was not as grim. Gold, silver, and oil all saw their prices recover last week's losses to some degree as they continued to react to exhaustion and support I wrote about in Friday's morning column.
Dow Jones Industrial Average (Figure 1)
The recovery was trivial compared to the staggering decline these commodities experienced last week, but it definitely helped take the edge off the pain for the bulls. Silver had been the hardest-hit last week with a loss of 27.39% despite pulling off the lows on Friday. The loss was reduced to 23.63% when silver prices settled on Monday afternoon. Gold had been down 4.16% so far this month when Friday's session wrapped, but it trimmed its losses to -3.12% and settled over $1,500 at $1,507.90 an ounce on Monday. Crude oil also broke back above a highly-watched price point. Last week it had fallen under $100 a barrel, but ended the session at $102.55 on Monday, bringing its month-to-date losses from 14.7% to 9.99%.
Although volume was lighter on Monday, these commodities will remain in focus in the weeks ahead, but continue to expect a more mild recovery when compared to last week's drop. Typically even a decent recovery in price with sharp intraday upside moves will still be broken by longer periods of congestion than experienced during the period of sharp selling.
S&P 500 (Figure 2)
The intraday action in the overall market was rather slow and choppy once again on Monday. Most of the morning was spent within a narrow trading range on the 5 minute time frame. Within this range, a bullish bias developed. First, a slower move into a second morning low held with the 10:45 ET correction period. This brought the indices quickly to the upper end of range where a smaller level of congestion formed on very light volume.
Upper level bases within a larger range such as this typically break higher, particularly when that smaller range experiences diminished volume. This led to main move of the day: a rapid break higher over noon. The remainder of the day was even slower than the morning as the indices congested along highs, although this time the smaller bias within that range was bearish, breaking lower afterhours. The 30-minute charts could still break either way since the momentum has been pulling sharply both ways intraday, but my bias is for further downside this week into stronger support at 50 and 100 day moving averages.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) ended the day with a gain of 45.94 points, or 0.36%, and closed at 12,684.68 on Monday. Two-thirds of the Dow's thirty index posted a gain. The top performers were Alcoa (AA) (+2.22%), DuPont (DD) (+1.43%), Caterpillar (CAT) (+1.20%), and Chevron (CVX) (+1.18%). The weakest were Intel (INTC) (-2.11%), Bank of America (BAC) (-1.06%), and Proctor & Gamble (PG) (-0.20%).
The S&P 500 ($SPX) rose 6.09 points, or 0.45%, and closed at 1,346.29. The strongest percentage performer in the index was Sysco Corp. (SYY) (+10.73%), whose earnings beat analysts' expectations. Other top performers were Cabot Oil & Gas Corp. (COG) (+5.53%), Pioneer Nat. Res. (5.43%), and Marathon Oil (MRO) (-5.29%). H&R Block (HRB) (-7.60%) was the weakest percentage performer. Other top decliners included Tyson Foods (TYC) (-6.03%), First Horizon Natl. Corp. (FHN) (-4.55%), and Micron Technology (MU) (-3.77%).
The Nasdaq Composite ($COMPX) ended the session higher by 15.69 points, or 0.55%, on Monday and it closed at 2,843.25. The top percentage performers in the Nasdaq-100 were Vertex Pharmaceuticals (VRTX) (+5.70%), Netflix (NFLX) (+3.02%), Illumina Inc. (ILMN) (+2.94%), and Joy Global (JOYG) (+2.88%). The weakest were Micron Tech. (MU) (-3.77%), Staples Inc. (SPLS) (-3.02%), Research In Motion (RIMM) (-2.13%), and Intel (INTC) (-2.11%).
There were no major economic reports released on Monday, however, things will pick up somewhat as the week progresses. Import and export prices and wholesale inventories are due out on Tuesday, while March's U.S. trade balance comes out on Wednesday. April's retail sales data will be out on Thursday. The week will wrap up with April's consumer prices on Friday.
In addition to economic data, earnings season remains in full swing. So far, 88% of the S&P too companies have reported earnings. 69% offered upside surprises, while 67% beat revenue expectations. Among this week's upcoming releases are Disney (DIS), which will be reporting earnings after Tuesday's closing bell, Macy's (M), which reports prior to Wednesday's open, and Cisco Systems (CSCO), which reports after Wednesday's close.
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.