The Dow Jones Industrial Average (
) closed higher again yesterday -- its eighth straight gain. Gains
were more confined to the blue chips than the broad market, and
focused on the Dow stocks, which closed at a 17-month high.
) was the top performer in the Dow with a gain of 2.1%, but there
were other strong performers in the index, too. DuPont (
) gained 1.6%, and 3M (
) rose 1.8%. But Caterpillar (
) was down 0.27%, and that held back gains.
), Nike (
) and Guess (
) announced better-than-expected earnings.
Bank of America (
) fell 1.5%, and JPMorgan Chase (
) fell 1%, as the financial stocks were weak over concerns that
Congress would propose new financial regulations.
But, overall, there was little in the way of corporate news to
have impact on the broad market.
Consumer prices in February were flat, and initial jobless
claims fell last week. But there are still storm clouds over
Greece, and the euro reflected that as it fell versus a basket of
other currencies. Despite assurances by the EU, and especially
Germany, worries continue that the significant amount of debt due
in April will cause an economic collapse. Greece continues to
resist help from other countries and the EU.
Materials stocks fell 0.7% as the U.S. dollar rose slightly due
to the expectedly flat consumer price data.
At the close, the Dow was up 46 points to 10,779, the S&P
) fell slightly to 1,166, and the Nasdaq (
) rose 2 points to 2,371.
The NYSE traded 942 million shares with advancers ahead of
decliners by 2-to-1. The Nasdaq crossed 566 million shares and
breadth there favored advancers by 3-to-2.
The April crude oil contract fell more than $1 overnight over
worries about Greece, but closed only 64 cents lower, at $82.29 a
barrel, on a New York day-to-day price. The Energy Select Sector
) fell 87 cents to $58.18.
March Gold rose $3.40 to $1,127.40 an ounce on a flight to
safety over the Greek economic situation, and the PHLX Gold/Silver
Sector Index (
) fell 1.17 points to 168.60. One trader was quoted by the Wall
Street Journal as saying, "Gold at the moment is being bought not
as a hedge against inflation, but as a hedge against currency
What the Markets Are Saying
Each day the market slogs along to new highs, and each day
momentum seems to be slowing, only to be followed the next day by
another new high. But yesterday, the upside was confined to the
better-quality stocks. Volume contracted to one of the lowest of
the year, which is unusual for a day before a
quadruple witching expiration
when four major classes of options go off the board.
There have been many reasons proposed as to why the volume has
been consistently low, but one that seems most logical is that the
public is, by and large, out of the market. And without public
participation, we are deprived of the cushion against wild trading
that steady public buying provides.
A week ago, we learned that mutual fund cash is down to only
3.6%, and much of that is derived from the inflow of public sources
of funds. As evidence of the impact of the public's purchasing
power, consider the year-opening rally that resulted from the flow
of cash from IRAs and other public pension sources.
Now without the public "cushion," stocks are subject to sharp
sell-offs since the market is in the hands of institutions that
sometimes pull the trigger en masse and drive prices wildly
S&P analyst Mark Arbeter noted recently that the major
swings in the past six months are unusual in that they have been
devoid of the usual backing and filling at key
resistance and support areas
. "In a sense, the market has become very one-dimensional at times
with the uptrends and downtrends very strong and unrelenting. In
our view, there seems to be a lot of hot money jumping into and out
of the market, which is great for the nimble trader, but a
nightmare for the rest of us."
With the expiration of major options contracts today, it is
likely that the current string of advances will come to an end.
Let's hope that the correction is not of the burn-and-pillage
variety, but of the backing-and-filling type.
A correction of modest proportions with the usual backing and
filling would be welcomed since it would bring prices back to more
normal levels and establish a platform for a more orderly advance
to new highs.
Today's Trading Landscape
Earnings to be reported include:
There are no significant economic reports due today.
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