Stocks advance but hit resistance

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So much for a breakout in the S&P 500.

The index began last week on a strong foot, only to stall at the top of its range since mid-March. Sellers materialized each afternoon to prevent the index from closing at its highs. Without that resistance, the S&P 500 would have appreciated 2.9 percent between Friday, April 6, and Friday, April 13. Instead, investors had to settle for a gain of just 2 percent.

Geopolitics didn’t help as Washington and Moscow traded barbs over Syria and trade jitters continued with China. There was also little embrace of positive earnings from major financials like JPMorgan Chase (JPM), Citigroup (C) and Blackrock (BLK). Other economic news was relatively light and had little impact on sentiment.

Energy rose almost 6 percent on the week, and accounted for 13 the S&P 500’s 20 best performers. Technology was the second-best major sector, up 3 percent, as momentum buyers returned to the market’s strongest long-term group. It was a good week for cryptocurrencies as Bitcoin (@XBT) triggered a short-squeeze by breaking a trend line.

Aside from lifting energy, the Middle East tensions weighed on airlines but pushed gold miners higher. Utilities, real-estate investment trusts and consumer staples — traditionally “safe havens” — fared worst. Homebuilders also struggled and gave back most of their gains from the previous week.

The S&P 500 remains near the bottom of its range this year after holding a key support zone around 2600. Bulls have been waiting for earnings season to lift sentiment and end a pullback that handed investors their first losing quarter in 2-1/2 years.

S&P 500
S&P 500 with moving averages marked up.

Results from Bank of America (BAC) kick off the agenda off this morning. Retail sales and the New York Federal Reserve’s Empire manufacturing index are also due. Netflix (NFLX) reports in the afternoon.

Real estate’s another theme this week. NAHB’s homebuilder index comes out Monday morning, followed on housing starts and building permits tomorrow. Tuesday’s earnings include UnitedHealth (UNH) in the premarket. The afternoon features CSX (CSX), Johnson & Johnson (JNJ), International Business Machines (IBM) and Lam Resarch (LRCX).

Wednesday morning has numbers from Abbot Laboratories (ABT), US Bancorp (USB) and Textron (TXT). Oil inventories and the Fed’s Beige Book of economic conditions come out during the session. Morgan Stanley (MS) and American Express report after the closing bell.

Thursday brings jobless claims and the Philadelphia Fed’s manufacturing index. The week concludes with big names like Honeywell (HON), General Electric (GE) and Schlumberger (SLB) Friday morning.

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David Russell is VP of Content Strategy at TradeStation. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.