Following a tentative opening with modest losses, the major
stock indices broke into positive territory Tuesday, and held onto
a small gain through the close.
The opening was lower due to disappointing revenues from Alcoa (
), the first Dow component to report Q1 earnings. But Home Depot (
), up 2.6%, helped to offset the decline in AA, and the key index
held above 11,000 for a second day.
Regional banks were weak following a downgrade by UBS of KeyCorp
), Huntington Bancshares (
) and Regions Financial (
). Dow component JPMorgan Chase (
) closed lower ahead of earnings to be reported this morning.
Offsetting the bank decline was a rally in consumer stocks,
which was a reaction to lower energy costs as oil fell for the
fifth consecutive day.
) rose 1.02% as investors anticipated better-than-expected earnings
to be reported after the close yesterday. And they weren't
disappointed when the big chip maker said that Q1 revenues jumped
44% and profits jumped to 43 cents a share versus analysts'
estimates of 36 cents.
So despite the many worries over earnings, China, Greece, and
you name it, the Dow Jones Industrial Average (
) rose 13 points, closing at 11,019, the S&P 500 (
) gained 1 point at 1,197, and the Nasdaq (
) was up 8 points to 2,466.
Volume on the NYSE rose slightly to over 1 billion shares, and
the Nasdaq traded 641 million shares. Advancers led decliners by a
slight margin on both exchanges.
Crude oil for May delivery fell for the fifth straight day,
losing 29 cents and closing at $84.05 a barrel on continued worries
that there is an increase of supply over demand. The Energy Select
Sector SPDR (
) dropped 21 cents to $59.76 as it fell from $60 for the third time
since last October. Initial support for the XLE is at the 50-day
moving average at $57.20.
June Gold fell $8.80 to $1,153.40 an ounce on profit-taking. The
PHLX Gold/Silver Sector Index (
) fell 1.25 points to 173.71. The next major support for the XAU is
at the conjunction of the 50- and 200-day moving averages at around
$165. During the last 10 minutes of trading, volume buying almost
reversed Monday's lower close, and a higher close today could
result in a resumption of the uptrend, which currently has a bull
channel resistance line at $180.
What the Markets Are Saying
Yesterday, stocks fought off the initial selling generated from
a lousy earnings number from Alcoa and again headed north, albeit
at a slow, slow pace. And no the techs will get a push today from
the positive earnings surprise from Intel.
One result of the slow, and then slower, advance, is that our
internal indicators have fallen from "extremely overbought" in late
March to just "overbought" now. In other words, earnings are
catching up with prices, so stocks will most likely continue to
plod higher as long as the high expectations for Q1 earnings
continue to be met.
In a market of higher prices day after day, you should always
try to play the mainstream of the market. As Dorsey Wright &
Associates says, "The main trend of a stock is when the stock is
above its bullish support line and the relative strength chart is
bullish." In other words, only buy stocks in an uptrend; don't
fight the market.
As our own Josh Levine, editor of
, says, "My interest has nothing to do with being 'right' -- just
with being on the 'right side' of the stock market and its
Well, Josh, momentum is again with the bulls, so we will
continue being long -- but nervous.
Today's Trading Landscape
Earnings to be reported before the opening
iGate, JPMorgan Chase, Medtox Scientific, Progressive and WW
Earnings to be reported after the close:
JB Hunt Transportation Services, Landstar System and YUM
Economic reports due:
MBA purchase applications, consumer price index (the consensus
expects 0.1%), retail sales (the consensus expects 1.2% and 0.5%
ex-autos), business inventories (the consensus expects 0.5%), EIA
petroleum status report and Beige Book.
Top 5 Stocks for the Recovery
With rising earnings, a strong balance sheet and a powerful new
product line (all despite the recession!) these five stocks are set
to outperform the market in the short-term.
Get their names here.