Sam Collins

Better To Be Long Than Wrong

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The stock market traditionally does little the day before an announcement from the Federal Reserve, and yesterday was no exception. Following some exceptionally volatile days, most traders welcomed the relief of a day that traded within just an 84-point range.

But that's not to say that there wasn't news. Warren Buffett hit the early headlines by announcing that his Berkshire Hathaway (BRKA) will acquire the 77.4% of Burlington Northern Santa Fe (BNI) that it doesn't already own, and Stanley Works (SWK) said that it would buy Black & Decker (BDK) for stock.

Better-than-expected auto sales and factory goods helped the broad tape.

The jobs report is not due until Friday, but there was much talk about it yesterday. Analysts are expecting a decline of about 175,000 non-farm jobs in October, and that would reflect a slower rate of decline.

The greenback traded higher against the euro and lower against the yen.

At the close, the Dow Jones Industrial Average (DJI) was down 18 points to 9,772, the S&P 500 (SPX) gained 3 points to 1,045, and the Nasdaq (NASD) rose 8 points to 2,057.

The NYSE traded 1.4 billion shares with advancers over decliners by almost 2-to-1. The Nasdaq had advancers ahead of decliners by 8-to-5 on volume of 7 million shares.

December crude oil rose $1.47 to $79.60 a barrel, and the Energy Select Sector SPDR (XLE) closed at $56.32, up 72 cents. 

December gold vaulted $30.90 to $1,084 an ounce, and the PHLX Gold/Silver Index (XAU) gained $10.09 to $168.34.

What the Markets Are Saying

Yesterday's lackluster trading will do little to change the mind of either bull or bear. But the tenacity of the market to hold its current position in light of what initially looked like a full-scale correction does encourage the bulls.

On the face it looks like the S&P 500 has broken below its 50-day moving average of 1,053, but is holding above the bottom of its current support zone of 1,020 to 1,070.

Momentum is now more oversold than at any time this year except the market low in March. But some services are noting that, despite the oversold condition of the internal indicators, each of the major indices has broken below the trendline that began in March.

But that trendline was already pierced back in the June-July correction and bounced back with vigor after touching the 200-day moving averages.