U.S. Stock Market - Mixed Signals in Record High Territory

The Dow Jones Industrial Average and the S&P 500 Index both made convincing new all-time highs today, but the Russell 2000 Index of small-cap stocks and the Dow Jones Transportation Average both failed to participate in the rally and actually posted eye-catching losses on the day. And as incredible as it sounds, declining stocks actually outpaced advancing stocks on all three major exchanges! Gold/silver stocks were demolished, which MUST mean that the “Risk ON” trade is now the dominant force. But Treasury bond prices were only slightly lower on the day, so maybe there is something else at work here? Most European stock markets were up sharply today, including Spain and Italy (recent laggards). German and French stocks were up almost 2% today.

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

                                                                                    Tuesday’s Closing Prices                   

Dow Jones Industrial Average                        14,662.01        + 89.16            +0.61%

S&P 500 Index                                                  1,570.25        +   8.08            +0.52%

NASDAQ Composite Index                               3,254.86        + 15.69            +0.48%

Russell 2000 Index                                               934.30        -    4.49            - 0.48%

Dow Jones Transportation Average                  6,087.04        -  75.26            - 1.22%

Bottom Line: Yesterday, a daily chart sell signal was triggered in my computer system for the iShares Dow Jones Transportation Average Index Fund ETF (symbol IYT). And today, a weekly chart sell signal was triggered in this same index. Today’s weakness in the Russell 2000 Index and negative breadth statistics on all three Exchanges probably calls into question the underlying strength in the overall U.S. stock market. Right now, I can’t see THE potential catalyst that will cement a new bear trend, but I feel confident that it’s lurking close at hand and that the current advance is on barrowed time.

DJTA iShares (IYT) Weekly Bar Chart with Computer-generated Buy & Sell Signals