Once again, stocks hit resistance

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For the second week in a row, stocks advanced but stalled at a key level.

This time it was the 50-day moving average, a seemingly magical level on the S&P 500 that everyone uses as a trend indicator. The index pushed above it on Tuesday, stayed there for the next two sessions, but then sellers hammered it back lower. By the time it was all said and done, the index eked out a 0.5 percent gain between Friday, April 13, and Friday, April 20.

Lots of conflicting things seemed to be swirling in the minds of investors. Price action was bullish for economically sensitive areas like energy, industrials and metals. But technology struggled on worries about slowing chip demand and smart-phone softness at Apple (AAPL).

The week started with strong auto purchases pushing retail sales above estimates. Housing data and industrial production beat forecasts, while the International Monetary Fund raised its projection for U.S. growth this year. That upbeat economic tone not only helped lift interest rates. It was also echoed by major industrial companies like Honeywell (HON) and General Electric (GE) and transports like UAL (UAL) and CSX (CSX).

Case in point: Corporate-jet maker Textron (TXT) shot up 12 percent on whose better-than-expected results. That made it the best performer in the S&P 500 on the week. Xerox (XRX) was close behind on reports that terms of its merger with Fuji may be sweetened.

S&P 500 index
S&P 500 index

Consumer staples were the worst performing major sector by a mile, crumbing 4 percent. They’re getting hit by the double-whammy of slowing sales and rising interest rates. Just look at Philip Morris (PM) — the S&P 500’s worst decliner — down 17 percent. Nektar Therapeutics (NKTR) was second-worst, sliding 14 percent.

Financials were a mixed bag amid a heavy flow of earnings reports. Most of the big banks chopped in their ranges. But, American Express (AXP) hit a new all-time high on signs it was regaining market share in the credit-card space. Retail brokerages like Charles Schwab (SCHW) and E*TRADE Financial (ETFC) also benefited from strong trading activity during February’s big market swings. ETFC may interest chart watchers because its shares have reentered a large  price gap from the dark days of the financial crisis in November 2007.

Cryptocurrency investors also had something to cheer about as Bitcoin (@XBT), Ethereum (ETHUSD) and other tokens continued their bounce from last week. While there weren’t any specific reasons why, crypto watchers cited getting past income-tax day (feared to spur selling), short-covering and estimates mining costs will limit new supply if Bitcoin remains below roughly $8,500.

The earnings onslaught continues this week, with at least 150 members of the S&P 500 reporting.

Alphabet (GOOGL) and Halliburton (HAL) are the big names today. Existing home sales are also due in the morning.

Tuesday’s big names include Caterpillar (CAT), United Technologies (UTX) and Texas Instruments (TXT). The Case-Shiller index of house prices, new home sales and consumer confidence are due, as well.

Wednesday features crude-oil inventories, along with results from Boeing (BA), Facebook (FB) and Visa (V). EBay (EBAY), which has received multiple upgrades on optimism about its business turnaround, also reports.

Thursday brings initial durable-goods orders, initial jobless claims and a blizzard of quarterly results. Amazon.com (AMZN), Intel (INTC), Microsoft (MSFT), General Motors (GM) and Starbucks are perhaps the most noteworthy.

The week concludes with oil majors Exxon Mobil (XOM) and Chevron (CVX). In addition, the government releases its initial reading of first-quarter gross domestic product.

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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.