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Stocks avoid 4-day loss, but sentiment is negative

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Stocks avoid 4-day loss, but sentiment is negative

Stocks in the US gyrated from positive to negative, before settling higher at the end of the trading session.  Better than expected jobless claims buoyed stocks on the open, but traders took profit mid-morning pushing the major indices into the red.

Chinese data pushed US futures higher, as the world’s second largest economy released export and import data that was stronger than expected. July trade data released on Thursday, showed global demand for China’s exports, should spill over into growth. The latest numbers indicate that China’s growth may have bottomed out in the second quarter, raising expectations of steady growth in the remaining months of the year. Exports were up 5.1% from a year earlier, reversing a 3.1% drop in June. Imports were up even more strongly from a year earlier, climbing 10.9%, a sign that domestic demand may be picking up

In the US, new jobless claims rose slightly last week but climbed less than expected. Initial claims for unemployment benefits rose by 5,000 last week to 333,000, according to the Labor Department.  Economists polled had expected first-time applications to rise to 336,000 last week.

In earnings news, Groupon (NASDAQ:GRPN) surged after revenue improved and the company announced plans to repurchase $300 million in stock over the next two years. Tesla Motors (NASDAQ:TSLA) jumped after the luxury electric-car maker’s quarterly loss narrowed sharply, beating Wall Street’s estimates, and the company said it delivered more vehicles than expected.

The small cap index the Russell 2000 has been the leader during the recent July rally.  The consolidation pattern could move either way.  A close below 1040 could create a head and shoulder pattern which is a reversal pattern that would lead to a test of the 50-day moving average near 1011.  Resistance is seen near 1070.  Momentum is negative with the MACD printing in negative territory with a negative trajectory.

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