After 5 days of trading in the green, the time came for the Dow to take a hiatus. The index ended off 0.53% yesterday, which marked only its second losing day since July 4th. The S&P 500 ended off 0.4%, but succeeded in clinging to the 2,800 point level. The NASDAQ fell 0.37%. Surprisingly – or not – the Russell 2000 (IWM) recorded a nice day of gains, ending up 0.71%, the index close to completing a Cup & Handle pattern, near an all-time high.

The banks, which were the main reason for the gains on Wednesday, changed camps, and were a not insignificant weight. In effect, Wednesday’s big winners were Thursday’s big losers, including Morgan Stanley (MS), which tumbled 1.4%, and J.P. Morgan (JPM), which plunged 1.47%. Bank of America (BAC) toppled 1.53%. Furthermore, a number of companies which released their earnings numbers on Wednesday after the closing bell saw their stocks get crushed during trading. EBay (EBAY), for one, nosedived 10%, American Express (AXP) falling sharply by 2.73%. A number of large stocks, including Apple (AAPL) and I.B.M. (IBM) prevented more sweeping losses on the index.

The market has continued to mislead traders of late, seeing that they don’t accurately reflect the overarching movement in stocks. Yesterday, for example, the market traded down, but that notwithstanding, it was a very positive day for the small stocks. Usually, with a market on an uptrend, we expect to see a number of stock groupings leading the market, like the FAANG stocks or tech stocks, biotech or crude. That, though, has not been the case of late. There’s no clear group that’s taken the lead, despite financial stocks’ attempted push.

When push comes to shove, there’s a positive element in small-cap stocks taking the lead, seeing that it reflects an increasingly large appetite for risk and investment in speculative stocks. When market players are anxious or are concerned, they tend to cling to the big names rather than to smaller, more volatile stocks.

Microsoft (MSFT) reported yesterday after closing. The company hit its earnings forecast by 6 cents, the stock recording gains of 3.26% after closing, which could give stocks a positive push today. We need a few positive responses to earnings reports to be able to get the uptrend back on track.

IndexLast

Daily change

DJX25,065(0.53%)Down
SPX2,804(0.40%)Down
NASDAQ7,825(0.37%)Down

 

Have a great trading day!

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