U.S. stocks and ETFs traded mostly sideways on Wednesday as major stock indexes stall near all time highs.
For the day, U.S. stocks and ETFs meandered, as the Dow Jones Industrial Average (NYSEARCA:DIA) gained 0.05%, the S&P 500 (NYSEARCA:SPY) was virtually flat with a 0.05% gain, the Nasdaq 100 (NYSEARCA:QQQ) declined 0.1% and the Russell 2000 (NYSEARCA:IWM) gained 0.34%.
In other major markets, gold (NYSEARCA:GLD) gained 0.26% and oil lost -0.03%.
Major U.S. stock indexes and ETFs have stalled just short of all time highs and now are moving sideways as momentum wanes.
The key numbers to watch for are:
1527, the S&P 500 closing high, March, 2000.
1565, the S&P 500 closing high, October, 2007.
14,164, the Dow Jones Industrial Average closing high, October, 2007.
These levels act as huge resistance levels going back for more than a decade. The previous two times these levels were reached, major declines ensued and now stock and ETF indexes will have to break higher and sustain these levels before a major new bull market can be confirmed.
Significant headwinds remain with the upcoming “sequestration” debate that will likely result in significant cuts to government spending which will slow the economy and investors are becoming overly bullish which is usually associated with a market top rather than a bottom.
Bullish investor sentiment is significantly above average levels, (48% vs. 39%) according to the American Association of Individual Investors, and in January, investors put more money into stock funds than in any month since 2006, and Defense Secretary Leon Panetta laid out a grim scenario for the Pentagon and the U.S. economy if the planned spending cuts take effect. Fox News
In Europe, investors will be watching tomorrow’s ECB meeting and the ongoing political scandal in Spain and the resurgence of Silvio Berlusconi in Italy. Read “American Stocks Dip On Eve of ECB Meeting”
The Euro (NYSEARCA:FXE) fell today on concern over these issues.
Tomorrow will bring more earnings reports and weekly jobless claims and productivity reports.
Bottom line: Stocks and ETFs run out of steam just below all time highs and at significant resistance levels. Fundamental issues grow and now Congress and the White House will return to center stage as the spending cut debate resumes.