New York, Aug.15, stock watch .- Stocks opened down Wednesday and closed lower as a broad decline pummeled nine of the ten S&P 500 sectors. Technology was the sole winner, and it only gained 0.01%.
The Dow Jones Transportation Average fell 0.81%, with 18 of its 20 stocks posting losses. And the Dow industrials fell 0.73% as two economic reports appeared to have a negative impact on stocks. The weekly MBA Mortgage Index fell 4.7%, its 12th decline in the past 14 reports, and July PPI was unchanged while core PPI ticked up by 0.1% where analysts were looking for better results.
At the close, the Dow Jones Industrial Average was off 113 points to 15,338, the S&P 500 fell 9 points to 1,685, and the Nasdaq lost 15 points at 3,669. On the NYSE, decliners outpaced advancers by 1.8-to-1, and on the Nasdaq, decliners were ahead by 1.4-to-1. Volume was light with the Big Board trading 622 million shares and the Nasdaq crossing just 374 million shares.
The S&P 500 chart illustrates the dilemma of this summer’s traders. Some chartists see a cup-and-handle formation in the above chart. This would be a bullish signal with the implication of a broad market breakout with a target of 1,775.
Others see the opposite — a head-and-shoulders top forming with the neckline at 1,676 and a downside target of 1,644.
It’s best not to anticipate either theory, but rather let Mr. Market tell you of his next move.
Conclusion: In the short term, you may be a bull or a bear — there is plenty of evidence on both sides. I’m more in the bear camp short term for reasons I’ve stated ad nauseam for the past week. But all should agree that the long-term trend is still strongly bullish and that a sell-off would be a great opportunity to load up on stocks that will return many-fold over the years. ...