The major indices ended mixed on Thursday. Caution seemed to dominate the market ahead of today's monthly employment numbers and amid a weak earnings season.
According to FactSet, Q1 profits for S&P companies are expected to fall for the fourth consecutive quarter, this time down 7.4%.
Notable decliners on Thursday included L Brands Inc ( LB ), the parent company of Victoria's Secret, which fell 12% after missing sales expectations, and Tesla Motors Inc ( TSLA ), which dropped 5% after reporting Q1 losses nearly doubled.
Energy stocks rose 0.8% on a 1.2% jump in oil prices to $44.32 a barrel. The gains were due to unrest in Libya and a wildfire in a major oil-producing region of Canada.
Gold lost 0.2% at $1,272.30 an ounce. The yield on the 10-year Treasury note fell to 1.76% from 1.79% on Wednesday. And the dollar advanced against the euro and yen.
At Thursday's close, the Dow Jones Industrial Average gained 9 points at 17,661, the S&P 500 fell fractionally to 2,051, the Nasdaq lost 9 points at 4,717, and the Russell 2000 was off 5 points at 1,108.
The NYSE Composite's primary market traded more than 949 million shares with total volume of over 4 billion. The Nasdaq crossed 1.9 billion shares. On the Big Board, decliners outpaced advancers by 1.1-to-1, and on the Nasdaq, decliners led by 1.7-to-1.
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Small-cap stocks, as represented by the iShares Russell 2000 Index (ETF) ( IWM ), have broken initial support at the 200-day moving average and a short-term trendline (red dotted line) at $112. An increase in negative volume and a short-term sell signal from the internal MACD indicator accompanied the breaks. The next support is at the 50-day moving average at $109.53.
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Mid-cap stocks, as illustrated by the SPDR S&P MidCap 400 ETF ( MDY ), have also broken initial support at $265 and a near-term support line (red dotted line). However, the break is not as serious as the one we saw in IWM since the 200-day moving average has not been violated.
The next support is at $259.86, the 50-day moving average. Downside volume is lower than average, and that is also constructive.
Small caps, dominated by technology stocks, have a more serious problem than the mid caps. However, it is clearly time to take profits and initiate protective strategies.
Aggressive traders should consider shorting or buying put options on high-P/E technology stocks. More conservative investors may still find bargains in the higher-yielding defensive sectors like utilities and my Trade of the Day .
Today's Trading Landscape
To see a list of the companies reporting earnings today, click here .
For a list of this week's economic reports due out, click here .