Lack of follow through stymies market

Market Snapshot for October 19, 2011 (4:25 p.m. ET):

  • Closing Prices: DOW 11,504.62 (-72.43, -0.63%), S&P 500 1,209.88 (-15.50, -1.26%), NASDAQ 2,657.43 (+42.51, +1.63%), Nikkei 225 8,772.54 (+30.63, +0.35), DAX 5,913.53 (+36.128, +0.61%), FTSE 5,450.49 (+40.14, +0.74%)
  • OIL 86.03, GOLD 1,643.20, SILVER 31.125
  • EURO 1.3752, YEN 76.82, BRITISH POUND 1.5773, U.S. DOLLAR INDEX 77.41

Lack of Leadership as Market Holds Resistance

The market hasn't offered up many surprises so far this week despite the fact that it's been swinging widely back and forth off highs and lows over the past week after striking strong resistance at the S&P 500's and Dow Jones Ind. Average's 100-day and 20-week moving averages. It was early last week that we first began to watch out for this type of action and today marked the ninth straight session in which the Dow has failed to follow-up the directional bias of one day into the close of the next. After striking the upper resistance zone on the daily time frame once again in Tuesday's session, the market reversed course into Wednesday.

Dow Jones Industrial Average (Figure 1)

The headlines have swung widely along with the market with the most emphasis upon the European debt crisis, the U.S. employment situation, and now earnings. The housing crisis has actually taken a back seat recently, but makes an appearance once again this week. On Wednesday, a report showed that housing starts rose sharply in September to the fastest pace in 1 1/2 years. Most of the gains, however, were from multi-family homes. Existing home sales data is due out at 10:00 a.m. ET on Thursday.

In other economic news on Wednesday, the Labor Department reported a 0.3% increase in U.S. consumer prices last month and a 0.1% increase in the core CPI, which excludes food and energy prices. This marks a 3.9% increase in the past 12 months, which is the largest increase in three years. The morning's data had very little impact upon price action in the index futures.

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