Stocks Hit Resistance After a Solid Day of Gains

New York, N.Y. (PPD) — Stocks gave back half their gains in the last 45 minutes of trading Tuesday, as investors continue to weigh the prospects for reopening the economy against the backdrop of record setting unemployment and rising bankruptcies.

From a technical perspective, all three major market averages backed off from key levels of resistance for the second time in two weeks following a strong six-week rally. Tuesday’s gains were led by Health Care +2.2% and Information Technology +1.4%.

The only sector finishing in the red was Financials -0.1%, while Consumer Staples (toilet paper) +0.1% also notably underperformed.

If early trading in stock index futures are any indication of market direction later this morning, we’re looking to make another assault at the same resistance levels that turned back the rally yesterday.

The Dow Jones Industrial Average (^DJI) held on to a gain of +0.6% to close at 23883.09 after having spent the first 6 hours of the day above the 24000 marker.

The S&P 500 (^SPX) closed just off its lows of the day at 2868.44, still a gain of +0.9% on the day. It’s worth noting that the S&P never touched the 2900 barrier intraday, despite being within 5 points of it for most of the afternoon.

The S&P has only closed north of the 2900 barrier twice since the first week of March. That was just last week, specifically the last two days of April. We need a rally of just over +1% for the S&P to close above 2900.

The NASDAQ Composite (^IXIC) continues its recent outperformance with a gain of +1.1% to close at 8809.12. The Nasdaq briefly crossed the 8900 level before the market drop during the last 45 minutes of trading. Keep a close watch on the 8900 – 9000 resistance level, as we’ll be there again this morning right after the 9:30 am opening.

The Russell 2000 (^RUT) closed at 1273.51, a gain of +0.75% after having flirted with the 1300 level earlier in the day. While the Russell did post a couple closing prints above 1300 last week, the real serious resistance level is a 100 point gap between 1350 and 1450 that spans the March 6 to March 10 closing prices. In the immediate term, that’s a heavy lift.