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Indexes swing in "tug of war" trade

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It's been "up" then back down again for the major indexes as traders watched U.S. troops in central Baghdad assist Iraqis in pulling down a statue of Saddam Hussein from the town square. As the statue fell to the ground, stocks traded off their best levels of the session to fall lower as if to mimic the today's war coverage.

The Dow Industrials (INDU) 8,241 -0.69% now trades lower by 58 points after reaching a session high of 8,388, marking a 140- point reversal as AT&T (NYSE:T) $14.79 -2.05% darts to yet another 52-week low, with McDonalds (NYSE:MCD) $15.45 -2.46%, Hewlett Packard (NYSE:HPQ) $15.42 -2.15% and General Electric (NYSE:GE) $27.37 -2.45% lend to weakness. Altria (NYSE:MO) $30.66 +2.2%, United Technologies (NYSE:UTX) $61.71 +1.59% and Boeing (NYSE:BA) $27.75 +1.42% hang onto gains in what has been a rather seesaw session for stocks.

The broader S&P 500 Index (SPX.X) 871 -0.81% is just off its lows of the session of 869 after trading its WEEKLY pivot of 869.50, and from here, traders are keeping a close eye on the 10-year YIELD ($TNX.X) 3.909%, which has systematically worked its way back lower from buying in Treasuries after it too tested its WEEKLY pivot of 3.903% early this morning, and then again in the past hour. A late-morning high YIELD of 3.961% was found when Saddam's statue was toppled, but similar to stocks, bond bulls showed up and YIELDS darted back lower.

In last night's Index Trader wrap we discussed the "crisscrossing" of upward and downward trends in the 10-year YIELD chart near 3.882% and this "cradle" was tested earlier this morning, with the upward trend now serving some near-term support at the weekly pivot if viewed on the 60-minute time interval.

Sector action has been broadly negative, then positive and negative once again this afternoon, with the Gold/Silver Index (XAU.X) 65.78 +2.38% now the only sector showing a gain greater than 2%.

Earlier weakness at the 11:00 AM EST update in the Computer Technology Index (XCI.X) 509 -1.58% and CBOE Internet Index (INX.X) 100.8 -2.28% has built on broader-market weakness.

On Friday, economic data will be released for March retail sales, and I thought equity traders might want to keep an eye on the S&P Retail Index (RLX.X) 283.49 -1.4% into Friday's report. For bullishness, I'm looking for pullback support in this index at the rising 21-day SMA of 276 to cross the still trending lower 200-day SMA of 278 to then look for a bounce higher after Friday morning's release of retail sales data. If so, this type of bullish catalyst may find the S&P 500 Index (SPX.X) providing a good bullish entry point from our pivot analysis work and "zone of support" in the 859-860 area with upward momentum provided from the rising 21-day SMA of 865.

Jeff Bailey

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