Market Direction Is Still in Limbo

The major indexes ended the day mixed, but the month of October “spooked” investors (sorry had to do it!). The NASDAQ closed down 11 points and remains below the 3000 support level, but holding barely to the 2975 mark short term. The S&P 500 index was flat on the day and holding above 1400 support. The headlines and reports all state that the northeast is still several days away from being operational. They may be months away from cleaning up the mess. Looking at the photos today from the Jersey shore it could be even longer. Plenty of speculation on who will benefit from the clean up and reconstruction. All interesting and food for thought as the details unfold.

The defensive sectors did show some muscle on Wednesday. Utilities were up 0.85 percent to lead the S&P 500 index. Consumer Staples were also up on the day. If this is the leadership to emerge from the current pressure on stocks… so be it! Take what the market gives you, and don’t force your opinion on the market, it never seems to work out well.

Short oil plays have been leading the last week of trading, but that may be ending as the price of crude bounced off support. Watch for some stabilization in crude. The volatility is still present in the sector short term. Watch for clarity to develop and a potential play in the sector going forward.

The Housing sector climbed 2% on the noise surrounding the rebuilding process in the northeast. Home Depot was higher as well as other suppliers. The infrastructure play may gain some ground as well once the evaluation and estimates are complete. IDE, ING Infrastructure Industrial and Materials ETF would be a good barometer for the sector moving forward.

Precious metals mining stocks were higher today gaining more than 3%. GDX, GDXJ and SIL were leaders for the market. They are working their way back to the top end of the current trading range on the ETFs and are worth watching going forward. Gold moved to $1721 and off the low testing resistance at the $1727 mark. Silver (SLV) is pushing against resistance at the $31.45 level. Watch for a potential push higher short term.

Dividend stocks are still garnering the headlines, but as we have seen they carry equal risk on the downside. Some dividend stocks of interest with the recent selling… McDonald’s testing lows near the $86 mark. CSX Corporation is testing the lows near teh $20.25 level. The railroad stocks have sold lower on lower capacity. As they bottom this could provide an attractive opportunity for long term investors. REM, iShares Mortgage REITs Index ETF tested support at the $13.80 level and has bounced back into a consolidation range near term. As it stabilized this could offer an attractive opportunity. The key is discipline for the entry, and a longer term time horizon to capture the dividend and the upside opportunity. These opportunities are for the more patient and longer term investor.

The jobs report is on for the Friday release and it is going to be watched as we head into the election next week. The estimates are for 120,000 new jobs to be added in the month of October. The unemployment rate is expected to tick up to 7.9%. Today promises plenty of entertainment as well with the ISM Manufacturing data to be released on Construction spending, Productivity numbers are due as well, and the Consumer Confidence Index report. The data in conjunction with earnings will direct market traffic short term. The key is to remain patient and let the market build it’s path  as we follow along.