Equities traded mixed on Wednesday on slightly higher trade. For much of the session all five major indices traded modestly higher but late selling pressure pulled three of the five indices into the red. The Dow Jones Industrial Average was the biggest loser on the day, as it fell 0.4%. The S&P 500 and the S&P MidCap 400 shed 0.2% and 0.1% respectively. The small-cap Russell 2000 showed the most strength on the day. The high beta index closed the session up 0.1%, while the Nasdaq closed fractionally higher. Non ferrous metals, transportation and telecommunication all fared well yesterday, while oil services, insurance and gold all struggled.
In what has become a common pattern lately, market internals ended the day mixed. Volume on both exchanges closed up by 1.7%. However, declining volume outpaced advancing volume on the NYSE by 1.2 to 1, while on the Nasdaq advancing volume topped declining volume by 1.1 to 1. The NYSE actually posted a distribution day yesterday, as it fell 0.3% on higher volume and higher declining volume. Although the Nasdaq saw higher volume and higher advancing volume, its price action was not strong enough to qualify for an accumulation day. Generally we like to see an index close higher by 0.3% or more to qualify for an accumulation day.
Since setting a swing high on March 19th, the ProShares UltraShort Lehman 20+ Bond Fund (TBT) has pulled back over the past two sessions and is nearing support of its 10-day MA. An undercut of the 10-day and/or 20-day moving averages could present a buying opportunity in TBT. We will be watching for a reversal candle to form near either of these two moving averages, as a signal for a potential pullback long entry.
Over the past two sessions, the S&P SPDR Select Materials Fund (XLB) has formed back to back reversal candles as it has tested support of its 20-day and 50-day Moving averages. A volume assisted move above yesterday’s high of $37.27 could present a buying opportunity in XLB.
The market struggled to find direction yesterday. We wouldn’t be surprised to see similar price action for several days before potentially resuming the broad market uptrend.
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