Investors are very focused on the earning seasons and they are trying the gauge the economic recovery in the private sector. So far, we have seen strong earnings from the US companies especially the US banks that reported their earnings last week. Basically, traders would like to see an echo of the same message that they have experienced in the economic numbers. If we look at the overall market performance, there is no doubt that US stock indices have gone too far and too fast and this overextended move could trigger some profit taking in the coming weeks.
The Asian stock market traded mostly higher on Tuesday. The Shanghai index advanced 0.36%. The HSI index increased by 0.23%, while the ASX index declined 0.70%. The Nikkei index also fell by 2.14%.
Dow Jones and S&P 500: Market Breadth
The Dow Jones’ market breadth gained further momentum yesterday. 97% of the Dow Jones stocks traded above their 200-day moving average.
The S&P 500 stock breadth also displayed strength yesterday. 96% of the shares traded above their 200-day moving average.
Dow Jones Futures Today
The Dow Jones futures are trading higher today. In terms of economic data, investors will be looking at the ECB interest rate decision as there is no major economic US economic event before that. The ECB is expected to keep the interest rate unchanged on Thursday. It is also likely that there may not be any change in the ECB’s asset purchase programme.
The Dow Jones futures have started to consolidate towards their record highs. The Dow Jones has been trading up for nearly five consecutive weeks and it is highly likely that we may see this wining streak losing its momentum. The Dow Jones has pierced the upper level of the Bollinger band on the weekly time frame. This piercing of the Bollinger Band is also in line with the RSI—meaning the RSI is also displaying an overbought reading. Thus, we could see the Dow Jones giving back some of its gains.
Having said that, the bullish trend is still very much in place as the price is trading above the 50, 100 and 200-day simple moving averages on the daily time frame.
The near term support is at 33,609, while the resistance is at 34,174.
Stock Market Rally
The S&P 500 stock index closed lower yesterday; the index declined by 0.53%. The consumer discretionary sector led the index higher and 10 out of 11 sectors closed lower.
The Dow index declined yesterday; the Dow stocks moved the index lower by 0.36%. 12 shares advanced, while 18 shares closed lower.
The NASDAQ composite, a tech-savvy index, also closed sharply lower by 0.98% yesterday.
S&P 500 Leaders and Laggards: Albemarle and Penn National
Albemarle stock contributed the biggest gain, soaring 3.6%. Penn National stock was the largest drag; it fell by 6.94%. The S&P 500 stock index is up 10.84% so far this year.
Dow Jones Leaders and Laggards: Goldman Sachs and Boeing
Goldman Sachs provided the biggest help for the Dow Jones; it advanced by 6.27%, while Boeing was the largest decliner, it fell by 1.62%.