The NASDAQ did what iStock was afraid that it might do, it busted support at September's pivot low. This is a milestone – of the bad kind – for a couple of reasons. First of all, the post-u-turn rally failed to set a new trend high. Instead, the indexes found its way to a lower low, today. That's the definition of a new trend – of the bad kind.
Fortunately, the Dow and S&P 500 haven't traveled the same path as the NASDAQ and trading above their respective September pivot lows. Without confirmation, there is time for Wall Street to throw the NASDAQ a lifeline and prevent the index from drowning.
Earnings will determine whether confirmation occurs or the uptrend remains intact, but bruised. Alcoa's (AA) profits were neither strong enough nor bad enough to propel equities dramatically in one direction or another today. Sales and profits for the aluminum company were down, but not down as much as reduced forecasts.
Cummins Inc. (CMI) wasn't so lucky, and shareholders will see the value of their stock shaved at the opening bell. There is a long way to go with third-quarter earnings. iStock will keep you informed on emerging trends.
Costco Wholesale Corporation (COST) will likely be Wednesday's most watch earnings announcement. The retailer is expected to earn $1.31 for the quarter. Analysts are raising their estimates slightly heading into today's quarterly check-up, which is usually a positive.
The big economic news for today will be the Fed's Beige Book. The report is created roughly two weeks in advance of an upcoming Federal Open Market Committee meeting. The book compiles anecdotal evidence on economic conditions for the US.
Traders will be looking for cues on which way the economy is heading; however, with last week's Employment Situation report and QE3's max employment or fiery inflation mandate, the Street knows the central bank won't make any changes in October's committee meeting. In fact, iStock feels that increasing QE3's bond purchases could set off panic selling. We think it would be interpreted as a desperate move as conditions are deteriorating and near crisis mode. Let's hope we don't get there.
Normally, we would have a trade idea or two today, but with the NASDAQ sporting a sell-signal, while the Dow and S&P disagree, iStock will stand on the sidelines until the technical picture clears up.