9:00am (EST)
The bulls failed to carry Monday’s momentum over into Tuesday as the market started lower and struggled for much of the day. The market slipped as optimism waned following the $1 trillion European rescue package. We didn’t have a triple-digit close on the Dow for the first time in five trading sessions although the index did move within a 200 point range.
The bulls did manage to push the market into positive territory for a few hours and trading was choppy going into the close before the bears pulled out the victory by taking two out of the three indexes.
The Dow traded to a high of 10,874 before falling back to close with a loss of 37 points, or 0.3%, to finish at 10,748. The index is trading a little above the 10,800 level we are watching and did finish the day below it. Sometimes you will see a stock or index “stretch” their support or resistance lines but the action is telling us Dow 10,200-10,250 is in the cards. A break below this level means we are going back under 10K.
The S&P 500 fell 4 points, or 0.3%, and settled at 1,155 after reaching a high of 1,170. We said in yesterday’s morning update the index could run to 1,170 and that is where the door was slammed. The bulls are trying to push past this second wave of resistance but once we fall below 1,150 we think the index could test 1,075 over the short-term.
The Nasdaq ended the day fractionally higher but by less than a point and closed at 2,375. The index reached a high of 2,405 but slipped at resistance once again despite an upbeat earnings forecast from Intel (INTC, $22.28, down $0.27). We can see 2,200-2,100 on the horizon.
Tech did manage to hold up but if you are a current bull then you had to be disappointed that Intel finished in the red. The company said that they expect revenue and earnings per share to grow at a double-digit rate as the market for personal computers continues to be robust. Intel went on to say that most of the growth will come from China and India.
Turning to earnings, Walt Disney (DIS, $35.76, up $0.47) is trading lower this morning despite posting better-than-expected results. The company posted a profit of $953 million, or $0.48 a share, versus $613 million, or $0.33 a share, in the year ago quarter. Revenue rose 6% to $8.6 billion. Analysts were looking for revenue of $8.4 billion and $0.45 a share.
Wall Street must have felt shares were a little overpriced and obviously they are a little disappointed that Disney’s media networks didn’t perform as well as their movie studios. Shares are lower by 3% this morning and are at $34.65, down $1.11, in pre-market trading.
As we head to press, the bulls are showing a little life this morning as futures are pointing towards a slightly higher open. Dow futures are up 34 points to 10,743 while the S&P 500 futures are up 5 to 1,158. The Nasdaq 100 futures are advancing 10 points to 1,945.
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