U.S. Stock Market - DJIA Alone At The Top Today

The Dow Jones Industrial Average advanced to another new closing high today (just barely). That makes 8 straight winning days in a row for this venerable market barometer. However, every other major index ended lower today. It was a relatively quiet news session, which had a dampening effect on composite volume. Declining issues outpaced advancing issues by about 3 : 2. Gold/silver mining shares were big winners today as both gold and silver rallied nicely. Most commodity related stocks were also generally higher, as were semiconductor shares. And T-bond prices rebounded nicely today after 5 straight days of heavy selling.

Here are today’s closing marks, with changes from Monday’s close:

                                                                                    Tuesday’s Changes                

Dow Jones Industrial Average                       14,450.06        + 2.77              +0.02%           

S&P 500 Index                                                 1,552.48        -  3.74              -0.24%

NASDAQ Composite Index                              3,242.32        -37.30              -0.32%

Russell 2000 Index                                              940.26        -  2.25              -0.24%                       

Tech giants Apple and Google were both down today, which contributed to a relatively weak NASDAQ Composite Index. Apple just can’t seem to buy a break. Jefferies lowered earnings estimates for AAPL today, and according to the IDC, Apple may lose market share over the next five years within its now-dominant iPad space. Ironically, on my list of undervalued stocks this week, of which there were only 5 names out of 6,500 listed U.S. stocks, Apple was #4. Almost hard to believe how far the pendulum has swung here, with this Company now trading at just 8.5x forward 12-month earnings, a peg ratio of 0.51, and a 2.47% dividend yield. Apple is down 19% this year so far and now down 39% from its record high set last September at $705.07. Maybe the $400 price support level needs to be tested in Apple before this great company can mount a sustained rally?

For your review, I have attached a copy of the daily bar chart for Wells Fargo (WFC). As you can see from the chart, a daily chart sell signal (RED Dot) was triggered within my computer trading algorithm at today’s close in this key player in the banking sector. My best guess right now is that a weekly chart sell signal will also probably be triggered in this stock before the end of this week. Is this another warning sign for the broader market? I think maybe yes!

Bottom Line: While generally not a big fan of the so-called “Dow Theory” in terms of market forecasting, I do keep an eye on the Dow Jones Transportation Average for possible clues to the next big swing. The DJTA peaked at 6,189 last Wednesday when the DJIA was 14,320. Since then, the Dow Industrials rallied 159 points to this morning’s intra-day high at 14,479, but the Dow Transports was actually down 19 points over this same time period. There hasn’t been a new high in the Dow Average Transportation Average since last Wednesday despite 4 new highs posted on 4 straight trading days for the Dow Jones Industrial Average. I see this as a bearish “non-confirmation” and another in a long list of caution signs now pointing to a meaningful overall  market correction immediately ahead.

Well Fargo (symbol WFC) Daily Bar Chart with Computer-generated Buy & Sell Signals

Dow Jones Industrial Average Daily Bar Chart with Computer-generated Buy & Sell Signals