Russell closes mildly higher

Small-cap stocks endured a choppy day of trading Tuesday, vacillating between positive and negative territory as index traders juggled both the positive and negative stock market implications of a rise in crude oil prices. In addition, the market struggled to evaluate the supportive side of an upside surprise in consumer confidence and a strong U.S. dollar against Federal Open Market Committee (FOMC) concerns about slower spending and the potential for further declines in payroll numbers. In the end, the Russell 2000 (NYSE:IWM) closed up 2.97, or 0.41%, at 723.51. For the year, the Russell is now down 5.5%, while the Dow is off 13.9% and the S&P 500 is down 13.4%.

Despite the uneven action today in small caps, it should be noted that price moves took place on relatively light volume, as we are winding down the summer vacation season, both here in the United States and abroad. Of greater significance is that the market has plunged back into the old range, validating the bearish topping pattern from the recent highs. In addition, the violation of key support along the 726 zone now leaves the market vulnerable to a slide toward the next logical support area near 711.50.

The lasting impression from today’s action could very well be the somber tone on the FOMC minutes (although the higher close certainly tames those concerns); but there were plenty of economic hurdles to navigate earlier this morning, including reports on housing and consumer confidence. The biggest surprise was a better-than-expected reading on consumer confidence, which laid the foundation for a relatively solid morning in stocks. The headline figure on confidence came in at 56.9, which was above the forecast of 53. It’s still not a lofty figure historically, but the . . .

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