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.
Morning trade was choppy with the S&P 500 and Dow holding up well until early afternoon. The Nasdaq was weighed down by Apple (AAPL). Shares of Apple (AAPL) were down more then 7% afterhours on Tuesday following its fiscal fourth-quarter earnings. The company surprised the market by missing expectations even though the iPhone and iPad maker's earnings and revenue were up strongly from last year. Despite the disappointment, it offered a better-than-expected outlook for this quarter. Earnings excluding items rose to $7.05 a share, while revenue increased 39% to $28.3 billion.
Momentum shifted in the market as the day wore on, finally giving way to selling pressure shortly after 13:00 ET. This pressure increased following the release of the Fed's Beige Book.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a loss of 72.43 points, or 0.63%, and closed at 11,504.62.Only five of the Dow's thirty index components posted a gain. The top performers were Travelers (TRV) (+5.69%) and Intel (INTC) (+3.59%). Both were higher following earnings. The weakest were Alcoa (AA) (-3.65%), Bank of America (BAC) (-3.61%), and Johnson & Johnson (JNJ) (-2.76%).
The S&P 500 ($SPX) finished the session with a loss of 15.50 points, or 1.26%, and closed at 1,209.8. The top percentage performers in the index were Intuitive Surgical Inc. (ISRG) (+9.11%), Apollo Group (APOL) (+7.87%), and Travelers (TRV) (+5.69%). The only industry group in the S&P 500 to advance were the utilities (0.1%). The weakest industry groups were materials (-3.0%), financials (-1.7%), and consumer discretionary (-1.5%). The weakest individual percentage performers were Comerica Inc. (CMA) (-10.52%), Western Digital (WDC) (-9.28%), First Solar (FSLR) (-8.66%), and Cliffs Natural Resources (CLF) (-7.04%).
The Nasdaq Composite ($COMPX) ended the session lower by 53.39 points, or 2.01%, on Wednesday and it closed at 2,604.04. The strongest performers in the Nasdaq-100 ($NDX) were Intuitive Surgical Inc. (ISRG) (+9.11%), Apollo Group (APOL) (+7.87%), and Intel (INTC) (+3.59%). The weakest were Green Mountain Coffee Roasters (GMCR) (-14.99%), First Solar (FSLR) (-8.66%), Marvell Technology Group (MRVL) (-5.91%), and Apple (AAPL) (-5.59%).
Nasdaq Composite (Figure 3)
NOTICE: I will be traveling Thursday evening to attend the World MoneyShow in Chicago where I will be presenting. As a result, this will be my final column this week and it will resume on Monday. I hope to see some of you there! Otherwise, catch the LIVE WEBCAST!
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.