Stocks began the month of September with modest gains, although significantly off their earlier gains. Market participants came back from the holiday in the U.S. with some decent news overseas in the form of purchasing managers indexes in China and Europe. This led to a roaring start to the day before a mid day selloff that erased all those gains. Then a late day rally pushed indexes back into the green. The S&P 500 gained 0.42% and the NASDAQ 0.63%. This remains a correction until we see a better condition on the charts. In stock specific news the big event of the day was two old school technology giants joining forces as Microsoft announced the acquisition of Nokia's handset business. Good news in U.S. economic data was found in the ISM Manufacturing report:
The manufacturing sector grew last month to 55.7 in August, its fastest pace in more than two years, according to the Institute for Supply Management. A reading above 50 indicates expansion in the sector. Construction spending gained 0.6 percent to an annual rate of $901 billion, according to the Commerce Department, topping expectations for a gain of 0.3 percent.
We continue to see the NASDAQ acting better than the S&P 500 although both are within downtrends. With the S&P 500 it gapped up over its 100 day moving average but fell back below in the afternoon before the late day rally pushed it right back to it.
10 year Treasury yields flirted with the 2.9% level on the good economic news but closed below.
If you want to see a sad chart, here is Nokia over 6 years - while today's move was great for recent shareholders, it barely put a dent in the major losses this stock has given to those who have held longer term.
The action in individual stocks and sectors was relatively random today - no clear themes out there. We mentioned a few sectors last week that had broken down out of bear flags - today's action helped them some, but for the most part they simply rallied to the bottom end of their flag pattern and if the market doesn't improve in the next few days, they remain at risk of a new leg down.
Usually we post charts from veteran technician Dan Zanger, but today just a quick snippet of comments he made over the weekend in his newsletter:
The market continues to sell off since hitting 1710 over 3 weeks ago with more stocks making new 52 weeks lows on Friday with heavy volume than stocks hitting new 52 week highs. In fact the ratio of new lows to new highs on Friday was 6 to 1 which says that money is leaving this market as we head into September which is historically the toughest month for stocks.