The Dow Industrials fell again yesterday for the second day in a
row, making it the sixth down day in the past eight sessions.
Despite a sell-off that has taken back all of November's gains and
provided better values, investors were reluctant to invest while
the threat of a tighter monetary policy in China and sovereign debt
problems in Europe remain.
Financial stocks were hit hard following a Wall Street Journal
report that the Federal Reserve will require all 19 banks that
underwent stress tests to do it all over again. And the FDIC said
that it is conducting around 50 criminal investigations of officers
of U.S. banks that failed during the financial crisis.
Financials were down 0.6% with the following stocks showing
Bank of America Corporation
) down 2.7%
JPMorgan Chase & Co.
) down 1.1%
Regions Financial Corporation
) down 6.4%
Wells Fargo & Company
) down 1.2%
Consumer-discretionary stocks did well, rising 0.7%, with the
following stock gaining:
) up 3.88%
) up 3.3%
BJ's Wholesale Club, Inc.
) up 2.97%
The sector also drew interest as a result of the General Motors
IPO. GM said that it will increase the size of the offering by 30%,
which could make it the largest in history.
U.S. consumer prices rose 0.2%, but less food and energy the
index was flat. U.S. home construction for October fell to its
lowest level in 18 months, and housing starts fell 11.7%.
Economists interpreted both reports as encouraging the Fed to
continue with its QE2 program.
The 10-year Treasury note fell again, bringing its yield to
2.864%. The euro rose slightly versus the U.S. dollar at $1.3515,
up from $1.3489 late on Tuesday.
At the close, the Dow Jones Industrial Average fell 16 points to
11,008, the S&P 500 was flat at 1,179, and the Nasdaq rose 6
points to 2,476. The NYSE traded 954 million shares with advancers
over decliners by 1.6-to-1. The Nasdaq crossed 521 million shares
with advancers ahead by 1.1-to-1.
Crude oil for December delivery fell $1.90 to $80.44 a barrel.
Energy Select Sector SPDR
) rose 25 cents to $61.70. December gold settled down $1.50 at
$1,336.90 an ounce, and the
PHLX Gold/Silver Sector Index
) closed at 207.19, up 0.46 points.
What the Markets Are Saying
Yesterday's pause following the nasty beating the market took
Tuesday may have been a welcome relief for the battered bulls, but
it doesn't change the technical outlook. With a powerful thrust
through the S&P 500′s 20-day moving average on high volume,
notice is given that the near-term trend is down and that the
intermediate-term trend is in jeopardy.
After big days down on Nov. 9 and Nov. 12, the latest drubbing
has each of the major indices breaking their respective 20-day
moving averages. But so far only the Dow Industrials have come
close to hitting the 50-day moving average. Yesterday's intraday
low at 10,991 came within just 12 points of it at 10,979. The
50-day for the S&P 500 is at 1,167, and the Nasdaq's is at
Michael Ashbaugh points out that the NYSE has seen two "9-to-1
downdrafts in the past three days." The term "9-to-1″ is used as an
expression of extreme selling and means that volume on the downside
was more than 9 times greater than volume on the upside.
In fact, Tuesday's drubbing was even worse than 9-to-1. It
produced a ratio of 14-to-1 on the NYSE and 10-to-1 on Nasdaq. This
is truly a nasty sign for the bulls, and is usually followed by
more days of selling.
GM's offering may provide a temporary respite for bulls. But if
the major indices plow through their respective 50-day moving
averages on more high-volume selling days, it's going to be a long,
The market weakness is creating some bargains, and one of them
Trade of the Day
Today's Trading Landscape
To see a list of the companies reporting earnings today,
For a list of this week's economic reports due out,
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