The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a loss of 12.90 points, or 0.1%, and closed at 12,569.87. Two-thirds of the Dow's thirty index components posted a gain. The top performers were Caterpillar (CAT) (+1.52%), Intel (INTC) (+1.38%), DuPont (DD) (+1.38%), and IBM (IBM) (+1.30%). The weakest were Bank of America (BAC) (-2.36%), JP Morgan Chase (JPM) (-1.15%), and Disney (DIS) (-1.00%).
The banking shares had not participated in last week's rally to the same degree as the overall market, leaving them even more vulnerable to weakness this week. Wednesday's hit came following a rise in interest rates in China and the move by Moody's to cut Portugal's credit rating to junk status.
The S&P 500 ($SPX) loss of 1.79 points, or 0.13%, and closed at 1,337.88. The strongest percentage performers in the index on Wednesday were Urban Outfitters (URBN) (+5.63%), Compuware Corp. (CPWR) (+5.52%), Tesoro Corp. (TSO) (+4.10%), and Cablevision Sys. Corp. (CVC) (+3.75%). The strongest sectors were consumer staples (+0.6%), industrials (+0.5%), and technology (+0.5%). The weakest individual performers were Charles Schwab (SCHW) (-3.95%), Marathon Oil Corp. (MRO) (-3.70%), Allegheny Tech. (ATI) (-3.68%), and News Corp., (NWSA) (-3.64%). The weakest sectors were telecoms (-0.8%), financials (-0.6%), and consumer discretionary (-0.3%).
Nasdaq Composite (Figure 3)
The Nasdaq Composite ($COMPX) ended the session higher by 9.74 points, or 0.35%, on Wednesday and it closed at 2,825.77. The strongest performers in the Nasdaq-100 ($NDX) were Urban Outfitters (URBN) (+5.63%), First Solar (FSLR) (+2.04%), Costco Wholesale (COST) (+1.66%), and Gilead Sciences (GILD) (+1.64%). The weakest were Research In Motion (RIMM) (-4.15%), Vertex Pharmaceuticals (VRTX) (-3.87%), News Corp. (NWSA) (-3.64%), and LAM Research (LRCX) (-2.92%).
My trading outlook for the remainder of the week has not changed much over the past several days. I am continuing to expect slower price action from one day to the next with better intraday swings on the 5 minute time frame that will favor daytraders. Swingtraders will be more likely to have to deal with a lot more overlap in price from one day to the next, which can make timing on stop adjustment and target levels a bit more difficult.
Employment Data Takes the Spotlight
Although this week has been light on data so far, the focus will increase over the next two days. The latest weekly claims for unemployment will be posted early Thursday morning, while the highly anticipated employment numbers for June will be released prior to Friday's opening bell. Friday's reports included June's nonfarm payroll, the latest unemployment rate, the average workweek, and average hourly earnings. Nonfarm payrolls are expected to have increased by 100,000 in June. This is not enough to keep up with new workers entering the workforce and is just half of what we had seen as monthly gains earlier this year (which were still not enough to make a dent in the larger unemployment picture).
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.