Stock Indexes Up In Morning Trade, Retake 50-Day Lines – Investor's Business Daily

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U.S. stock indexes dealt with a mix of news and earnings reports Tuesday as the indexes regained their 50-day moving averages.

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The Nasdaq and the Dow Jones industrial average popped 1.1% and 1%, respectively. The S&P 500 advanced 0.8%. The small-cap Russell 2000 added 0.6%.

Volume was running higher on the NYSE but lower on the Nasdaq compared with the same time Monday.

The 50-day line has been a problem since mid- to late March for the Nasdaq and the S&P 500. The  indexes moved above the 50-day line Tuesday morning but the test will be at the close. A close above the line now would help validate the market’s uptrend. If the indexes were to convert the 50-day line from resistance into support, the next resistance area would be at the 7500 price level for the Nasdaq and the 2800 area for the S&P 500.

Apart from those technical tests, the market is still vulnerable to news events. China announced Tuesday that it would slap a tariff on U.S. sorghum imports. The move followed the U.S. decision Monday to ban U.S. firms from selling parts to Chinese phone-maker ZTE Corps for seven years. The U.S. Commerce Department said ZTE  violated an agreement when it shipped U.S. goods to Iran.

In other news, speculation continued to surround the Dodd-Frank law. The Street isn’t clear on what kind of changes will ultimately be applied to Dodd-Frank. The uncertainty could be one reason bank stocks have not reacted much to recent earnings beats.

Goldman Sachs (GS) became the latest big bank to report strong quarterly results and then shrug off the performance. Goldman’s earnings came in well above estimates. But the stock reversed to a 0.4% loss in morning trade.

Netflix (NFLX) gapped up 7% after reporting results and strong subscriber growth late Monday.

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