Stocks Slide Sideways Again

After a rally of nearly three weeks that saw stocks rise about 6% to return
near their highs for the year, a second straight day of sideways trading
suggests the market may be getting low on momentum. On Monday, two of the three
major indices finished on the red side of flat as the stars of the financial
market were gold and silver, which notched all-time and 31-year-highs,
respectively. The Dow Jones Industrial Average dropped 6 points to 12,394, the
Nasdaq gained 2 points to 2791 and the S&P 500 lost less than a half-point to
1333. An overnight interest-rate hike by China set an early negative tone to
things, which was then carried out in a flattish day in Europe – the worry
being that a forced slowdown to the Chinese economy wouldn't necessarily be a
good thing for the rest of us. The price of crude oil slipped back as a result,
to $108.34 a barrel, taking with it transportation stocks, which now have last
Friday as a near-term peak to emulate. The breakdown in airline stocks is
particularly illuminating, as the sector's selloff –which is again nearing
lows of the year – couldn't even be saved by the pullback in crude.  United
Continental (NYSE: UAL ) closed down 4.4%, while US Airways (NYSE: LCC ) lost
3.3%. Of course, what we're really talking about in the daily stock market
post-mortem game is that most large-cap stocks, or rather, investors in
large-cap stocks, have had their fill of the recent rally, or see no need to bid
them higher for the moment. Small-cap stocks, however, continue to rise
unabated. Note that since last Tuesday's close, the Russell 2000 has risen
nearly 2.8%, while the S&P 500 has gained about 1%. While it's a fool's
errand to introduce hardcore analysis after two sideways days that followed a 6%
runup, one could also venture that while speculators are still chasing smaller
names, the underperformance by larger names suggests that some external
confirmation, either from first-quarter earnings season or more positive
economic data, is needed for stocks to break above the resistance established in
mid-February.