Despite some strong numbers from the retailing group after the Thanksgiving holiday, which saw Wal-Mart (NYSE:WMT) $55.02 +2.07% report its single largest day of sales in company history on Friday, bulls lost their aggressiveness after the Industry of Supply Management Index showed a still contracting manufacturing industry with a 49.2 reading, which was below economist's forecast for a 51.0 reading. The 49.2 came in below the 50.0 level and signals a still contracting industrials environment.
While the Dow Industrials (INDU) 8,867 -0.31% is off 28 points and has given back an earlier 140 point gain, the NASDAQ Composite (COMPX) 1,495 +1.15% holds a 17 point gain after trading has high as 1,521 and making a break above its longer- term 200-day SMA of 1,493. Larger cap technology stocks depicted by the NASDAQ-100 Index (NDX.X) 1,132 +1.4% also holds onto a gain of 15 points as it tried to inch above its 200-day SMA of 1,119 after teeter tottering around this longer-term moving average the past four trading sessions.
After breaking above its 200-day SMA back on November 15th, the Wireless Telecom Index (YLS.X) 64.54 +5.42% continues to be a sector that leads technology strength and is currently today's biggest sector gainer.
Wireless Telecom Sector Index (YLS.X) - Daily Chart
The YLS.X was the first technology sector to make a break above its 200-day SMA and a sector I thought tech bulls needed to show further gains to the upside to help drag the NASDAQ-100 and Tracking Stock (AMEX:QQQ) $28.17 +1.62% higher to their 200-day SMA's. So far this has taken place and tech bulls would like more of the same. With the NASDAQ-100 Bullish % ($BPNDX) now at 80% and well above the 70% bullish level, I'm somewhat suspicious of Morgan Stanley's upgrade of the sector today as the index nears its bearish resistance trend on the point and figure chart, while also nearing the upper-end of retracement. I think downside risk currently is to the 52 level and would make for good entry points for bulls on a pullback. As such, would limit bullish exposure here to 1/2 positions maximum.
The Utility Index (UTY.X) 241.95 -1.55% has moved into the number 2 slot on sector losers behind the Forest&Paper Products Index (FPP.X) 291 -3.64% after S&P cut El Paso's (NYSE:EP) $8.49 -0.35% debt to "junk" status. This follows Moody's November 26th "junk" rating on El Paso's debt.
Volume rates were heavy earlier in the session, but the ISM data sure seemed to have some traders stepping back and volume now runs just about average for this time of day. NYSE volume is just over the 955 million mark, while NASDAQ is slightly heavier at 1.2 billion shares traded.
With sector action relatively mixed, breadth is slightly bullish with advancers outnumbering decliners by a 3 to 2 margin at both the NYSE and NASDAQ.
The new highs versus new lows category continues to improve at both the NYSE and NASDAQ, with 51 stocks trading new highs versus 13 stocks at new lows on the big board, and 105 stocks at new 52- week highs versus just 19 new lows at the NASDAQ.
After some sharp selling in the early part of the trading session, bonds have found some buyers come back in, but price action remains to the downside when marked from Friday's close. The benchmark 10-year YIELD ($TNX.X) 4.254% traded with a high YILED of 4.351% just before the release of the ISM data, but has settled back right near Friday's YIELD high of 4.251%.