Yesterday, stocks opened lower following a worse-than-expected
jobless claims number. Selling continued through the first hour of
trading, pushed along by more concerns about Greece's borrowings,
as the cost to insure the country's bonds rose to a record
But the selling ebbed when the president of the European Central
) tried to assure lenders that there was no information that would
indicate that Greece will default on its bonds. The assurance was
made following the ECB's decision to leave their targeted lending
rate at 1%.
The Dow Jones Industrial Average (
) was off about 54 points just before the ECB announcements, but
buyers emerged following the statement in the U.S. financial
The U.S. dollar, which was strong in the first hour, began to
sag, and the euro rallied. By the close, the financial sector had
swung from a 0.7% loss to a 0.8% gain.
Buyers also picked away at retail stocks following strong sales
gains for both Target (
) and The TJX Companies (
) for March. But despite strong sales for JC Penney Co. (
) and Kohl's (
), both of those stocks fell.
At the close, the Dow rose 30 points to 10,927, the S&P 500
) gained 4 points to 1,186, and the Nasdaq (
) gained 6 points to 2,437.
The NYSE traded just over 1 billion shares with advancers over
decliners by a margin of 8-to-7. The Nasdaq crossed 611 million
shares with advancers just slightly ahead of decliners.
May crude oil fell $1.25 to $84.63 a barrel on a reaction to
increasing inventories, and the Energy Select Sector SPDR (
) gained 21 cents, closing at $59.20.
June gold fell 10 cents to $1,152.90 per ounce, and the PHLX
Gold/Silver Sector Index (
) closed at 175.95, down 10 points.
What the Markets Are Saying
After two days down, stocks posted modest gains yesterday. But,
although encouraging to the bulls, it was not a reversal day to the
upside, but it does neutralize the negative chart picture and puts
us back into the position of evaluating the markets internal and
All of the most-watched internal indicators for the Dow
Industrials, the S&P 500 and the Nasdaq are still overbought,
with the slight exception of the momentum indicator, which is just
slightly overbought. The momentum's fall to a more neutral stance
is not surprising given the relative sideways movement of stocks
during the past four sessions.
The single internal indicator that continues to bother me is the
Relative Strength Index (
. Although it has fallen from the extreme highs of March, it is
still overbought. But a modest correction in stocks could bring the
RSI more in line, and for that reason, along with the many levels
, I believe any correction will most likely be shallow but long
On to the sentiment indicators. The AAII numbers have been
moving to the more bullish side for the past two weeks, and now
show bulls 42.86% and bears 30.36% (which is not good).
The CBOE Volatility Index (
) is at 16.48, showing a level of excessive bullishness and
complacency among options traders. StreetSmartReport.com commented
yesterday that the VIX has closed that low only four times since
2007, and each time it coincided with a major top. StreetSmart went
on to say that the most significant top was made on Oct. 9, 2007,
which was the exact top of the 2003 to 2007 bull market.
There has been no change in either the internal or sentiment
indicators for several weeks. They must lead us to a very cautious
stance on the market, so I remain a very cautious bull.
Today's Trading Landscape
Earnings to be reported before the opening:
Blyth Industries and Constellation Brands.
Economic report due:
Top 5 Stocks for the Recovery
With rising earnings, a strong balance sheet and a powerful new
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Get their names here.