(By Rich Bieglmeier) Monday's action was sort of like an aftershock following a major earthquake, a small reaction with seemingly very little consequence. The coil unloading a bit was to be expected, but commitment was ehh, with very average volume.
iStock would have like to seen bulls mount up and buck the market higher with conviction. Instead, they rode the mechanical bull on six, no big freaking deal, the mat is 18 inches deep.
That being said, the day's move pulled the index above oversold reading on a relative strength basis, and the number of NYSE stock below their 10-day moving average under 90%. Now you see why Yahoo finance played it both ways with their headline, Wall Street Week Ahead: Market is oversold, but major signs say "sell".
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The buying could lure more buyers, bargain hunters, to the market on Tuesday. After all, nobody wants to miss out on a good deal. Soon enough, the same folks who were talking sell on the weekend will be extolling the virtues of what a great opportunity it is to get in around NASDAQ 2900.
And that's when the index should run into trouble going higher. It was a stiff floor on the way down and should be a hard ceiling on the way up. Of course, there is a little wiggle room on either side.
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The quarterly profit season is all but double zeroes, so the market will become more reliant on economic news and technical factors for now. Tuesday's existing home sales could add some punch, but iStock doesn't expect too big of a surprise.
The most important news items will come on Thursday when last week's Jobless numbers get revised up, and this week's results are released, and April's Durable Goods Orders are announced.
Last month's Durable Goods bombed, but not in the bad is good sense of bomb. The results were actually bad, in the bad sense of bad. Wall Street is expecting a 0.7% gain for the diamond month. The regional manufacturing news has been mixed making a robust rebound tenuous. We'll have more on this in tomorrow's market brief.
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