U.S. stock indexes strolled ahead in declining volume midday Wednesday, taking a break from the past two days of pain.
The Nasdaq and the S&P 500 added nearly 0.5% and 0.3% respectively. The blue-chip Dow Jones industrial average was flat. Small caps led with the Russell 2000 up almost 0.7%.
Volume faded on both major exchanges.
On Monday, the S&P 500 showed stalling action, and on Tuesday both major indexes suffered distribution. Stalling involves rising volume without much price progress. Distribution involves rising volume combined with a loss. Both point to institutional selling.
So, bulls began Wednesday’s session with a modest goal — avoid trouble.
Among IBD’s 197 industry groups, most were doing just that. Advancing issues outnumbered declining groups by a 9-2 ratio.
The day’s leaders included apparel and restaurants.
In the apparel group, Deckers Outdoor (DECK) took a stab at a breakout.
The midcap stock surged 2.7% to 101.75 in the first 15 minutes of trade and then reversed to a small loss. Deckers is just below a 99.02 buy point.
Volume was running below average.
Ugg boots provide about 45% of Deckers’ net sales. Companywide sales declined 5% in fiscal 2017 ended in March.
The sales decline was expected because of a restructuring strategy that the company is undergoing.
This Group Gets Hotter
In the restaurant group, Chipotle Mexican Grill (CMG) cleared a tight pattern in heavy volume. The stock was trading just under 437 midday Wednesday. The buy point is 433.10.
Chipotle is recovering from mediocre earnings and sales in 2015-16. Q1 results were reported in late April. Adjusted earnings growth rolled in at 33% on a 7% sales gain.
Chipotle is a new idea on IBD SwingTrader.
Morgan Stanley’s Long-Term Crude Outlook
Oil stocks were sagging on signs of weakening demand. The price of light sweet crude fell 0.5% to just under $71 a barrel.
However, the longer-term outlook appears bullish for oil prices, according to Morgan Stanley. Analysts at Morgan Stanley say that new shipping regulations will begin in January 2020. The new rules require vessels to consume lower sulfur fuels.
Morgan Stanley expects that to push oil prices to $90 a barrel by 2020.
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