The market had its least volatile session in well over a month as Wall Street ignored some weak economic news (what else is new) and instead chose to focus on today’s upcoming election. The Dow started Monday off slightly higher but we did not get the 100 point open in either direction as we have been seeing.
Before finishing essentially flat, the Dow moved in a range of about 150 points which was well below well October’s average daily swing of 600-700 points. The bulls were scared to take positions ahead of the rally in what could be a democratic sweep while the bears looked content on targeting the next area of weakness. We also saw a lack of action in the often-volatile final hour which proved yesterday’s overall sentiment was tentative.
As a result, the Dow fell 5 points, to 9,319 but did hit a high of 9,410. The S&P 500 dipped 2 points, to 966, while the Nasdaq squeezed out a small gain of 5 points to close at 1,726.
Perhaps the biggest news of the day concerned the auto companies as they reported weak sales for October. Although credit is tight, consumers are certainly staying away from showrooms and keeping what they have running. General Motors (GM, $5.65, down $0.14) U.S. sales plunged 45%, Ford Motor (F, $2.13, down $0.06) sales fell 30%, while Toyota Motor (TM, $76.66, up $0.57) sales dropped over 20%.
The news means that U.S. auto sales are in a tailspin and are at their weakest monthly levels since 1983. Cars and light trucks dropped to 840,000 in October after falling below the 1 million threshold in September for the first time in 15 years. In case you are counting, it marked the 12th consecutive monthly sales decline. The group needs the government’s help but so far nothing has been done to help the struggling industry.
The market is looking to bottom and only time will tell if October 10 was the low. However, the first few weeks of November are often bullish and there is often a relief really after the election is resolved. Last week the Dow added over 11%, its best weekly performance in nearly 35 years, while the S&P 500 and Nasdaq added over 10% as well.
The calm from yesterday doesn’t necessarily mean the market has overcome all its worries but things are improving. Remain cautious but all signs are pointing towards a push to 10,000 for the Dow.
Rick Rouse
Rick@OptionsMentoring.com
