Stock indexes on Tuesday carved off all or most of the prior session's gains and did it in rising volume.
The Nasdaq lost 1.3%, while the S&P 500 and the Dow Jones industrial average severed 0.9% and 1% respectively. The small cap S&P 600 chopped off 1.7%, and the Dow Jones utility average dropped 1.8%. Volume was higher across the board.
The weekly charts of the indexes, however, raised the question of whether the market is putting in a floor or a trapdoor. The Nasdaq and S&P 500's recent weekly closes look like a floor — tight closes without much additional price movement south. Yet, the closes are coming low in the week's range, and the 10-week line is serving as fierce resistance, at least for the Nasdaq.
Bulls and bears both need to consider three other factors:
—The put-call ratio closed at 1.07 Tuesday, in line with closes of 1.15 Friday and 1.07 Thursday. Levels with fear this high are often associated with short-term market bottoms.
—The IBD 50 has purged itself of many of the defensive stocks that showed up on the list not too long ago. Two months ago, stocks such as Public Storage (PSA), Sovran Self Storage (SSS) and Campbell's Soup (CPB) were on list. They're gone.
—The Federal Reserve will release the minutes from its April 27 meeting on Wednesday at 2 p.m. ET.
Thanks to the Fed, the market remains in a zone where good news can be regarded as bad news and bad news as good news.
