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Flat line after jump in consumer confidence

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The major indexes have settle down after a bumpy ride this morning when the indexes jumped to multi-month highs after the Conference Board said its consumer confidence index spiked to 81 in April, the largest one-month jump since the first Gulf War concluded in March 1991, and a reversal for four straight months.

The jump in April consumer confidence was well above economist's forecast of 70 as attitudes about both the present and the future improved in April.

The expectations index jumped to 84.8 in April, which was well above March's dismal 61.4 reading.

Of the 5,000 consumers surveyed, the percentage of those who said the economy was "bad" fell to 23.7% from 30%, while those saying it was "good" rose to 16.2% from 13.6%.

As weekly jobless claim have shown a deterioration in the jobs market, those surveyed by the Conference Board saying that jobs are hard to find fell to 29.5% from 32.3%, while those saying jobs are plentiful edged up to 13% from 11.4%.

On Thursday, traders and investors will mill over the weekly jobless claims report from the Labor Department with analysts forecasting 23,000 decline from last week's 455,000, with consensus estimates at 432,000.

Despite the boost from today's confidence report, consumer spending remained rather anemic in April. Today, the Bank of Tokyo-Mitsubishi reported that its weekly retail chain store index fell 1.6% in the latest week and had the bank forecasting that sales for March and April combined, will have comparable sales rising just 1% year-over-year.

The news out of Bank of Tokyo-Mitsubishi finds the S&P Retail Index (RLX.X) 300 +0.83% and the Retail HOLDRS (AMEX:RTH) $77.28 +1.13% holding roughly 1/2 of their early morning gains. Retailing Dow components have Wal-Mart (NYSE:WMT) $56.48 +0.78% and Home Depot (NYSE:HD) $28.43 +1.86% gaining on today's session.

Major index action has the Dow Industrials (INDU) 8,489 +0.2% holding an 18-point gain after trading a session high of 8,559, which was good enough to trigger a spread-triple top buy signal at the 8,550. In today's market monitor I felt that the trade at 8,550 was further sign of strength in combination with last Tuesday's trade at 8,450, which generated a bullish triangle. First sign of weakness for the Dow on a point and figure chart would be a trade at 8,250. Longer-term target would continue to be the December highs near 9,000.

On a broader scale, the S&P 500 Index (SPX.X) 917 +0.21% holds a modest 2-point gain after a morning high of 924 and pullback low of 911.10. The SPX, not unlike the other major indexes does seem to find bullish resistance at the upper-end of its Bollinger band. I'm starting to see some after-noon improvement from the late morning lows in the financial sectors with the S&P Bank Index (BIX.X) 288.39 -0.17% off just 1/2-point here after holding its 19.1% conventional retracement of 285.40 this morning. Actually, this rather bullish support level wasn't tested as this more regional banking index morning low came at 286.15. I do think while not imperative on a near-term basis, SPX and S&P 100 Index (OEX.X) 465 +0.11% bulls would like to see the BIX.X make another move higher and take out last week's high of 290.58. Still, this index has made a major move higher in the last week or two, and current trade hints more of consolidation and some profit taking. As identified in recent Index Trader Wraps, the reverse head and shoulder pattern on this index, with a bullish price objective based on the pattern of 308, has not seen a test of the neckline at 281 since the recent break higher from that level.

The tech-heavy NASDAQ-100 Index (NDX.X) 1,113 +0.54% is beginning to make some way off its session lows of 1,103, but still off its highs of 1,126 found just after the release of today's consumer confidence report. The Networking Index (NWX.X) 161 +2.12% and Semiconductor Index (SOX.X) 339 +1.88% currently trade at their afternoon highs. Taiwan Semiconductor (NYSE:TSM) $8.46 +10% leads semiconductor gains after the chip foundry reported earnings that beat estimates by a penny on revenues of $1.13 billion, which were up 10.2% year-over-year.

Market internals at the 01:00 mark have the NYSE showing advancers outnumbering decliners by a 17 to 14 margin, while NASDAQ shows similar breadth with advancers outnumbering decliners by a 15 to 13 ratio.

New highs versus new lows remains healthy with the NYSE reporting 116 stocks having achieved a new 52-week high compared to just 6 stocks having traded a new 52-week low. Meanwhile, NASDAQ reports 124 stocks having traded a new 52-week high compared to 20 stocks at new 52-week lows. High readings for both 52-week high categories on the NYSE and NASDAQ were seen last week at 202 and 147 respectively. Yesterday, the NASDAQ did report a matching number of 147 new 52-week highs and shows leadership still exists in these broader indexes.

Jeff Bailey

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