It's been a rather quiet trade this morning as stocks have slowly drifted lower with the Dow Industrials (INDU) 8,579 -0.57% trading down 50-points, lead by fast food giant McDonald's (NYSE:MCD) $15.83 -8.91% after the company once again lowered earnings guidance below analyst's estimates.
Still known for its "golden arches" the past three yeas have seen McDonald's arches fall along with its stock price as growth wanes in the increasingly competitive fast food market. Today, the company said that based on December results, it now expects Q4 results to be lower than the first two months of the quarter and expects margins to be pressured lower than the comparable period last year. MCD now expects Q4 EPS of $0.25-$0.26, which is well below consensus of $0.32. The forecast included a foreign currency benefit of $0.01-$0.02.
The only technical action I've seen this morning had the NASDAQ- 100 Trust (AMEX:QQQ) $25.92 +0.19% see selling at a morning rally high of $26.20, which was 2-cents above our "market maker" resistance from fitted retracement of $30-$20. This is retracement I've discussed in our Index Trader Wraps each night. In what may be a "range-bound" market, QQQ traders may have to be willing to trade some tight ranges and try to take what the market is giving.
Yesterday, the major market indexes had the Dow Industrials, S&P 500, S&P 100, NASDAQ-100 and NASDAQ Composite all rebounding from or near their trying to round higher 50-day SMAs, but today's action has yet to find any tests of the starting to round lower and shorter-term 21-day SMA's.
The smaller cap Russell-2000 Index (RUT.X) 392.16 -0.69% finds intra-day resistance at its rolling 21-day SMA for a 6th consecutive session, but still well above its rounding higher 50- day SMA of 380, which hasn't been challenged like the other major indexes saw late Friday. The reason for mentioning this is that it has been my observation from the past that the smaller caps are less likely to see bearish short activity, at least to the scale we find in many of the larger and more liquid stocks of the Dow, SPX, OEX and NDX.
The dollar, as depicted by the U.S. Dollar Index (dx00y) 103.42 -0.59% is breaking to a new 52-week low against a basket of major currencies. In recent sessions, the weaker dollar looked to have been driving bullishness in the Gold/Silver Index (XAU.X) 76.82 -1.77% and bringing weakness to the broader equity markets. This morning's action looks to be "half true" as gold equities trade near their session lows after a higher trade early in the morning.
Treasuries are seeing little action and take a marginally higher trade in the early going. The December 10-year Treasury futures (ty02z) 113'25 +0.09% edge higher, while the benchmark bond's YIELD ($TYX.X) falls to 4.109%.
Sector action started the morning off rather mixed, but has turned more negative as the session progresses. Sector gains of greater than 1% are now limited to the North American Telecom Index (XTC.X) 115.07 +1.32% as this index attempts to find support at its still trending lower 200-day SMA of 457.
Sector weakness has precious metal stocks leading declines as the Gold/Silver Index (XAU.X) 76.26 -2.49% trades off a session high of 79.26, while retailers as depicted by the Retail HOLDRS (AMEX:RTH) $71.69 -1.9% and S&P Retail Index (RLX.X) 274 -2%, Drugs (DRG.X) 302 -1.4%, Oil Service (OSX.X) 91.56 -1.4%, Wireless Telecom (YLS.X) 55.23 -1.4% all suffer declines greater than 1%.