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Unchanged after lackluster economic data

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The major indexes are relatively unchanged after traders were inundated with economic data this morning, which still shows an economy exhibiting anemic growth.

The last spattering of economic data was released at 10:00 AM EST, which showed April business inventories rising 0.1%, compared to March's 0.3%. While the rise in business inventories abated, it would be my interpretation of the data, based an April sales declines of 1.5%. For those supply/demand followers, I would consider sales a measure of demand (which fell) and business inventories as supply (which rose fractionally). While the data is now "old" as it is from April, today's response from the markets seems to have participants not overly concerned, and perhaps discounting the news as "old" and most likely putting greater weight on the May data, which will extend itself from the "war with Iraq" period.

Still, today's weekly jobless claims data, which is much more current, certainly shows that businesses aren't hiring back workers at any type of rapid pace. Some economists are now saying that the jobless data, which does extend itself far enough past the "war with Iraq" is sign that while the war did have a negative impact on psychology, the jobs data shows that "business psychology" at this point has not improved enough to have corporations hiring back workers.

While the major indexes trade at unchanged levels, and off their highs of the session, in today's 11:00 AM EST update, I mentioned that we had actually observed a "sell program premium" triggered right at the S&P 500 Index (SPX.X) 996.50 -0.09% level of 1,000, which came approximately 15-minutes before the release of the April business inventories data.

In last night's Index Trader Wrap at OptionInvestor.com, we discussed a level near 1,001 as being a "first level" of resistance for today's trade. For me, having identified that level, seeing it sold with a computer program BEFORE the 10:00 AM data was released, leaves me wondering if today's April inventories data was really much of a factor in today's trade.

My thinking is that the MARKET was rather unmoved by today's economic data, and is still looking for something else to disprove what I would have to say is a MARKET betting on a recovery.

If I were pressed to pick one level from a major index that at this point would signal weakness, I would have to say Dow Industrials (INDU) 8,900, which would be a level, if traded, would be the first point and figure sell signal this index would generate, since its double-top buy signal at 8,000. Current trade in the Dow Industrials is 9,190 and holds a 7-point gain after reaching a session high of 9,236, which actually traded just above Friday's high of 9,215. Today's trade in the Dow actually lends itself to bullishness in my opinion, as there had been some concern that Friday's sharp morning reversal in the indexes was a "reversal top" type of trade. While the Dow Industrials is just 30-stocks, and may be benefiting from a weaker dollar and holds stocks with larger dividends that my benefit from recent tax bills, today's ability to pierce Friday's highs can be viewed a slight technical positive.

I've been monitoring the market internals this morning, and they've been holding steady for the most part.

The NYSE currently shows advancers outnumbering decliners by a 17 to 14 margin, with 372 stock reaching new 52-week highs compared to 3 stocks at new 52-week lows.

NASDAQ breadth has been hovering unchanged for the bulk of the session and at the 01:00 PM mark shows decliners outnumbering advancers by 151 to 149. 211 stocks have traded new 52-week highs compared to 4 stocks trading new 52-week lows.

Jeff Bailey

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