With many global markets closed and on light volume, U.S. stock indexes advanced as the Institute for Supply Management Report (ISM) came in stronger than expected, opposite yesterday’s bust in the Purchasing Managers Index, and gave hope for better economic activity ahead.
The Dow Jones Industrial Average (NYSEARCA:DIA) reached levels not seen since 2007 while recession continues to spread in Europe and Monday evening reports indicate that Japan’s economy contracted 0.8% in March.
In spite of today’s advance, major indexes were not able to keep the day’s highs and rolled back sharply in the last half hour of trading.
For the day, the S&P 500 (NYSEARCA:SPY) added 0.6%, the Dow Jones Industrial Average (NYSEARCA:DIA) climbed 0.5%, the Nasdaq 100 (NYSEARCA:QQQ) was up 0.12%, the Russell 2000 Index (NYSEARCA:IWM) tracking small cap stocks fell -0.12%.
Components of the ISM report were also positive with new orders rising and employment numbers coming in positive, as well.
Tomorrow brings factory orders and ADP employment reports.
On a technical basis, major indexes remain in the recent trading range and now reside just below significant resistance. A break higher will generate a huge short squeeze and push higher while another failure to advance would add to the bearish picture. Today’s weak close wasn’t impressive as good days start weak and end strong, not start strong and end weak.
Major S&P sectors were green today, however, significant weakness continued in the tech sector with Apple closing down today and resting right at its 50 day moving average. This should be significant support and a break below here would have ominous repercussions not only for Apple and the tech sector but for the entire S&P 500, as well, due to Apple’s ponderous presence in the widely watched index.
Bottom line: After a down month of April showers, can May flowers be in our future? We’ll learn more as significant economic reports come in during the week.
Disclaimer: Wall Street Sector Selector trades a wide range of exchange traded funds and positions can change at any time.