Quiet, steady start for small caps
Small-cap shares hovered near steady levels in a relatively calm start to the week, as the market appeared to be waiting for more dramatic news to stir volatility into the mix. For now, investors appear to be juggling concerns about record crude oil prices and top-heavy signals on charts against positive money flow into equities. At 10:03 a.m. ET, the Russell 2000 (NYSE:IWM) was down 1.14, or 0.15%, at 740.04. Small-caps were slightly soft early on compared with large-cap index products, which is a minor cautionary signal.
The Leading Indicators report came in up 0.1% for April, which was slightly better than the forecast, and up from a decline in both March and February. The data had very little immediate impact on trading, as the report is a compilation of “dated” information on the economy.
Crude oil pushed to a fresh record high this morning, and remains a troubling element for the market and the economy in general as consumers are forced to use discretionary money to pay for gasoline at the pump. In Chicago, pump prices have now climbed above $4 dollars a gallon, a prickly price zone right in front of the peak summer driving and holiday season in the United States.
The relatively tame start to the U.S. trading session mirrored overseas markets, which were narrowly mixed. Europe shares were hovering near steady levels into the U.S. open, while Asia stocks posted slight gains and losses depending on the country – but no major moves were carved on the books overnight.
Large-caps of note that could early this morning include Amazon.com (Nasdaq:AMZN) and Texas Instruments (NYSE:TXN), which were upgraded by Goldman Sachs overnight. Amazon was up 3.2% shortly after the opening, while Texas Instruments was up 1.9%. Yahoo! Inc. (Nasdaq:YHOO) rose 1.7% on talk that Microsoft (Nasdaq:MSFT) was reopening talks with Yahoo about some type of joint venture deal. Lowe’s Companies (NYSE:LOW) was down 3.1% after earnings disappointed investors.
Among broad market sectors, buyers were attracted to internet retail, construction materials, refining/marketing and gold. On the downside, investors were selling home improvement and home furnishing retail stocks, as well as brewers and tire/rubber firms.
Individual small-caps on the move this morning included Scansource Inc. (Nasdaq:SCSC), which jumped 10% without fresh news to power the rise. Raven Industries (Nasdaq:RAVN) rallied 8% early, benefiting from an earnings-tied boost. On the downside, Learning Tree International (Nasdaq:LTRE) tumbled 7%, without news. PDI Inc. (Nasdaq:PDII) was down about 5%, also without news.
From a technical analysis perspective, it will be interesting to see how the market trades early this week after rejecting new highs two of the last three sessions last week, including a bearish outside reversal Friday. The topping patterns serve up a little caution in here, even though prices are at the highest level of the year. Support today comes in at 735, 731 and 726, while resistance is at 744 and 750.
