The Stock List: Profit-Taking, Europe and the End of the Month Effect
Strength in industrial and materials stocks helped send markets higher early as the news from Europe appeared to improve. But sellers emerged over the course of the day to take profits in a number of stocks that had made signficant gains by mid-session.
Among the best performing stocks in the S&P 500 ahead of trading on Wednesday were manufacturing and chemical companies like ^ATI^ up more than 7%, and ^FMC^ up more than 6%.
Note that the S&P 500 (basis the ^SPY^) and the Russell 2000 (basis the ^IWM^) have both finished in overbought territory below the 200-day moving average. As the end of the month approaches, traders should be reminded that markets could continue higher, becoming increasingly overbought, before profit-taking begins in earnest.
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Among the companies scheduled to report quarterly earnings on Wednesday are ^DRI^ and ^MKC^. Shares of Darden reversed lower after opening back above the stock’s 200-day moving average to finish down well over 1%. McCormick shares finished higher on Tuesday, ending the day above the 200-day and closing up for a fourth day in a row.
Also reporting earnings on Wednesday is ^FDO^. Shares of FDO pulled back after rallying to new 10-day closing highs on Monday and are back in neutral territory above the 200-day.
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Here are 7 Stocks You Need to Know for Wednesday
Up more than 4%, shares of ^RIMM^ rallied into overbought territory below the 200-day moving average ahead of trading on Wednesday. The stock has been trading below its 200-day since the spring, but has closed higher for the past three consecutive sessions.
Buyers continued to return to industrial stocks from oil names like ^HAL^ up more than 2% to chemical companies like ^DOW^, which gained more than 4%. Continued strength in these stocks could put them in overbought territory below the 200-day moving average by the end of the week.
Shares of ^LULU^ gained more than 4% intraday before reversing lower to finish near breakeven. The stock had pulled back for four out of the previous five trading days.
Also up more than 4% intraday before reversing lower were shares of ^DECK^. Tuesday’s close puts the stock near overbought territory above the 200-day.
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Gold stocks began the day strong, but sold off over the balance of Tuesday’s session. Ending the day down more than 1% were mining stocks like ^NEM^, which has finished lower for four out of the past five trading days.
What’s down on an up day? Trading above its 200-day moving average, shares of ^DMND^ have closed lower for five straight sessions. Off by more than 3% on Tuesday, the stock has finished in oversold territory for a second day in a row.
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David Penn is Editor in Chief of TradingMarkets.com