Modest rise; energy, tech, retail stocks lag financials
Small-cap stocks edged slightly higher in a relatively tame post-holiday session, climbing into positive ground just minutes before the close, with support from financial, manufacturing and construction stocks countered by a weak tone in energy and technology shares. Also, retailer stocks were struggling on an important day that signals the kick-off for holiday shopping.
The Russell 2000 (NYSE:IWM) closed up 4.28, or 0.91% at 473.14, putting the finishing touches on a stellar week (which saw the Dow have the best percentage gain in more than 70 years). For 2008, the Russell 2000 is now down 38%. Meanwhile, the Dow is down 33% and the S&P 500 is off 39% for 2008.
Crude oil prices took a hit today, with futures down 5% and the price of crude slipping back below $52 a barrel. Energy shares were a major drag on the overall market performance today, with the Energy Select Sector SPDR Fund off some 1.7%.
Tech stocks started out the day in a dour mood following declines in Europe when major chip-maker STMicroelectronics lowered its outlook. Tech shares persistently trailed major indices today and the tech-laden Nasdaq 100 dipped 0.6%. Europe shares struggled in general today following news that unemployment rates in the Eurozone tumbled to 20-month highs and confidence tumbled to 15-year lows.
Dow component Wal-Mart Stores Inc. (NYSE:WMT) – the only Dow stock up for the year – took a 1.4% hit today, perhaps tied to news that an employee was killed in the rush of Black Friday shoppers when a store in New York opened early this morning. Four shoppers, including a pregnant woman, were also treated for injuries in the stampede incident, adding a new somber meaning to the “Black Friday” moniker. The S&P Retail Index was down 1.7% today, perhaps a caution sign for not just retailers, but the overall consumer spending mentality heading through year-end. However, there remains a sense that much of the “bad news” about the holiday season and the economic picture going forward has already been priced into the market.
The U.S. dollar had a sizable rally against the euro, climbing some 1.5%, as investors around the world continue to clamor for U.S. assets. The greenback was up, the Dow was higher and Treasury instruments were higher as well. Yields on benchmark 10-year notes tumbled to the lowest weekly close in history, which shows that even though stocks are trying to mount a bounce from last week’s lows, demand for credit products remains dynamic despite low yields.
Individual small caps making big moves today were highlighted by energy firm Callon Petroleum Co. (NYSE:CPE), which collapsed 65% amid analyst downgrades. Also on the energy front, ATP Oil & Gas Corporation (Nasdaq:ATPG) slipped 11%, seeing a modest correction off a huge rally Wednesday. Even outside of energy, that trend of giving back a small portion of Wednesday’s gains was a prominent theme and included iPCS Inc. (Nasdaq:IPCS), as the Sprint affiliate tumbled 14%. On the upside, there were plenty of financial firms among the biggest percentage gainers; outside of financials, Harbin Electric Inc. (Nasdaq:HRBN) rallied 17%, climbing above the 20-day moving average on a closing basis with conviction for the first time since August.
The chart picture shows promise on daily studies after forming a bullish reversal on the lows last week and extending the comeback during this week’s action. That said, there is still no dramatic bullish reversal in play on weekly studies, and similar bullish daily reversal patterns off move lows failed to hold up on three previous occasions since October. There are some Elliott Wave pundits who point to potential 5th-wave bottoms on various charts. Looking ahead to next week, it will be important for the Russell to hold up above 450/442 to retain a bullish stance. On the upside, “figure” resistance at 500 will be an important test, as will the 525 zone.
The Russell 2000 (NYSE:IWM) closed up 4.28, or 0.91% at 473.14, putting the finishing touches on a stellar week (which saw the Dow have the best percentage gain in more than 70 years). For 2008, the Russell 2000 is now down 38%. Meanwhile, the Dow is down 33% and the S&P 500 is off 39% for 2008.
Crude oil prices took a hit today, with futures down 5% and the price of crude slipping back below $52 a barrel. Energy shares were a major drag on the overall market performance today, with the Energy Select Sector SPDR Fund off some 1.7%.
Tech stocks started out the day in a dour mood following declines in Europe when major chip-maker STMicroelectronics lowered its outlook. Tech shares persistently trailed major indices today and the tech-laden Nasdaq 100 dipped 0.6%. Europe shares struggled in general today following news that unemployment rates in the Eurozone tumbled to 20-month highs and confidence tumbled to 15-year lows.
Dow component Wal-Mart Stores Inc. (NYSE:WMT) – the only Dow stock up for the year – took a 1.4% hit today, perhaps tied to news that an employee was killed in the rush of Black Friday shoppers when a store in New York opened early this morning. Four shoppers, including a pregnant woman, were also treated for injuries in the stampede incident, adding a new somber meaning to the “Black Friday” moniker. The S&P Retail Index was down 1.7% today, perhaps a caution sign for not just retailers, but the overall consumer spending mentality heading through year-end. However, there remains a sense that much of the “bad news” about the holiday season and the economic picture going forward has already been priced into the market.
The U.S. dollar had a sizable rally against the euro, climbing some 1.5%, as investors around the world continue to clamor for U.S. assets. The greenback was up, the Dow was higher and Treasury instruments were higher as well. Yields on benchmark 10-year notes tumbled to the lowest weekly close in history, which shows that even though stocks are trying to mount a bounce from last week’s lows, demand for credit products remains dynamic despite low yields.
Individual small caps making big moves today were highlighted by energy firm Callon Petroleum Co. (NYSE:CPE), which collapsed 65% amid analyst downgrades. Also on the energy front, ATP Oil & Gas Corporation (Nasdaq:ATPG) slipped 11%, seeing a modest correction off a huge rally Wednesday. Even outside of energy, that trend of giving back a small portion of Wednesday’s gains was a prominent theme and included iPCS Inc. (Nasdaq:IPCS), as the Sprint affiliate tumbled 14%. On the upside, there were plenty of financial firms among the biggest percentage gainers; outside of financials, Harbin Electric Inc. (Nasdaq:HRBN) rallied 17%, climbing above the 20-day moving average on a closing basis with conviction for the first time since August.
The chart picture shows promise on daily studies after forming a bullish reversal on the lows last week and extending the comeback during this week’s action. That said, there is still no dramatic bullish reversal in play on weekly studies, and similar bullish daily reversal patterns off move lows failed to hold up on three previous occasions since October. There are some Elliott Wave pundits who point to potential 5th-wave bottoms on various charts. Looking ahead to next week, it will be important for the Russell to hold up above 450/442 to retain a bullish stance. On the upside, “figure” resistance at 500 will be an important test, as will the 525 zone.
About the Author
Kevin Pendley covers the Russell 2000 index for SmallCapInvestor.com and writes a weekly technical analysis column.
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