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Stocks Set A Minor Goal, But Can Market Get It Done?

Stocks erased most losses and turned mixed Friday morning, increasing hopes for the market to climb a second straight day. Such a minor goal for the stock market illustrates the challenges that bulls face.




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Traditional support and resistance levels are not in play for the Nasdaq and S&P 500. The Nasdaq began the day 3.5% under its 200-day line, while the S&P 500 was 2.2% under the key area.

In morning action on the stock market today, the Nasdaq huddled around a 0.2% loss, while the S&P 500 rose 0.1%. The Dow Jones industrial average clawed up 0.3%. The small-cap Russell 2000 traded 0.2% lower.

Early volume was higher vs. the previous session’s pace.

Oil Stocks Up

Oil stocks were mostly up. Chevron (CVX) popped 1.3%. Houston-based EOG Resources (EOG) gapped up 2.8%. Continental Resources (CLR) added 2%. Murphy Oil (MUR) rose 1.2%, trading just under its 50-day line.

Light sweet crude advanced 1.8% to $57.50 a barrel Friday morning, holding about 5% above its 52-week low of $54.75. Crude oil is about 25% off its Oct. 3 high.

The drop has been especially painful for stocks in the international explorer group. Among IBD’s 197 industry groups, international explorers ranked No. 42 six weeks ago. Now the group ranks No. 171.

Historically there hasn’t been a strong link between oil prices and stock prices, according to research from Nicholas Colas, co-founder of DataTrek Research. But apparently the current market is a poor student of history: As the price of crude oil slid almost 29% in about six weeks, the Nasdaq dropped almost 15%.

“Crude should stabilize right here, right now,” Colas wrote in a note Friday. But the recent, in-step decline in oil and the stock market raises a question. “Is it coincidence, or a sign that asset prices are syncing-up to discount a global recession in 2019?” Colas wrote.

As Apple Goes, So Goes The Market

For many stock market investors, Apple (AAPL) also needs to stabilize. They consider Apple a proxy for the market. Apple began the month retaking and closing above its 50-day line. Since then, Apple has lost its 50-day and 200-day lines. The stock rose 2.5% Thursday, ending a five-session losing streak.

On Friday morning Apple added 1.6%.

On Thursday, Morgan Stanley analyst Katy Huberty dismissed recent pessimism on Apple. She wrote in a note that Apple is a buying opportunity. Huberty kept an overweight rating on Apple with a $235 price target — a 23% premium to Apple’s current price.

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