Bulls Take a Break; Stocks Up Marginally

With the Dow up seven straight days - though narrowly - reports on Durable Goods and New Home Sales boosted stocks, but the mood was cautious at midweek.

Thanks to the Cash for Clunkers government rebate program, durable goods orders registered their largest monthly gain in two years, up 4.9%, though the gain ex-autos was more in-line with expectations, though still solid at +0.8%.

The Commerce Department reported that sales of new homes rose for the 4th consecutive month in July, up 9.6% to a seasonally-adjusted annual rate of 433,000. Stocks were trading lower prior to to 10:00 am release of that number, but quickly shot into positive territory.

However, as has been the case in each of the last three days, gains were short-lived and all of the major indices spent the rest of the day zig-zagging the break-even line in a listless session. There still exists a good amount of commentary calling for a correction, though market participants are loath to give up gains or miss out on another potential leg up. All of the indices are at or very near resistance points dating back to last November 4, when stocks rebounded sharply after falling in September and October amidst uncertainty over the future of the entire financial system.

That ugly scenario seems to have been averted, but investors remain cooly cautious with summer quickly coming to an end. September is one of the rougher months for stocks and could be even harder considering the outsize gains made during the warm months of July and August.

Dow 9,543.52, +4.23 (0.04%)
NASDAQ 2,024.43, +0.20 (0.01%)
S&P 500 1,028.12, +0.12 (0.01%)
NYSE Composite 6,687.94, -9.28 (0.14%)

Declining issues narrowly beat back advancers, 3261-3111, but new highs finished ahead of new lows again, 174-45. If one was to take a cue from the indications supply by the new high-lows metric, it would appear that the market is not ready to relinquish its bullish posture. The number of new lows has continued to shrink in the face of growing investor optimism. Even bad stocks are getting bids.

Volume was its usual slow self, with nothing much in the way of volatility even whispered at this point. Stocks have barely budged all week and volume has been sluggish.

NYSE Volume 1,169,384,000
NASDAQ Volume 2,054,796,000

Crude oil future, now in the October delivery contract, tumbled another 62 cents, to $71.43. Gold dropped 20 cents, to $945.80. Silver shed 6 cents, to $14.29. While it was a slow day everywhere, that didn't prevent futures traders to send most commodities lower for the second straight day. Today it was the food category hardest hit after yesterday's assault on the energy sector.

Tomorrow morning all eyes will be trained on the 8:30 am release of new unemployment and continuing claims. That number should set the tone for the market, though there are more than enough other forces at work to swing consensus one way or the other. With resistance just overhead, it's becoming increasingly difficult for stocks to continue their heady climb.