Find an Options Broker | Log In | Register

Calling a Failed Breakout is Premature

by Sam Collins 09/03/09

The ADP employment change report for August, which was released yesterday, showed more jobs lost than analysts expected, so stocks fell for the fourth-consecutive day.

Economists had expected 250,000 jobs lost, and instead the report indicated that 298,000 were lost. This puts special focus on Friday's official jobs number, so the market may not do much until then.

The less-than-perfect economic results continued with the July factory orders. Even though the orders were the best so far, they missed the expected target of 2.2% with a reported increase of only 1.3%.

This week was expected to be focused on economic issues. What was not expected was the odd response of investors who sold heavily on Tuesday on good news, while Wednesday they were much more tolerant of bad news -- go figure.

At the close, the Dow Jones Industrial Average (DJI) was off 30 points to 9,281, the S&P 500 (SPX) fell 3 points to 995, and the Nasdaq (NASD) lost 2 points to 1,967.

The NYSE traded 1.4 billion shares with decliners ahead by 3-to-2. On the Nasdaq just 612 million shares traded with slightly more decliners than advancers.

October crude oil closed at $67.63, down 10 cents, and the Energy Select Sector SPDR (XLE) fell 37 cents to $49.91.

1 | 2 | 3 | Next

More By This Expert

Should You be Worried the Market is Overbought?

I've been noting that our internal indicators are overbought, but none of them actually issued a sell signal until yesterday.

Emerging Markets Fund Looks Tired

The iShares MSCI Emerging Markets Index Fund (EEM) has been a great performer but, like the broad market, is showing sign of fatigue.

Volume Declining to Lowest Level of the Year

Major investors are reluctant to put more cash to work until they are convinced that the economy is moving forward enough to warrant new investments.

Bulk Up Your Portfolio With SB

With shipping rates going up, dry bulk carrier Safe Bulkers Inc. (SB) has broken from a bullish formation.

Is the Market Tiring?

Most technicians would consider a divergence in the Dow averages to be a potentially important indication that the market is tiring. But is this a serious problem, yet?