Market Talk

Stocks finish lower in a dull, light-volume session. Dow Industrials stay cooped up in a tight range for most of the day, and then falter in the final minutes in action that looked more like buyer fatigue rather than any fresh offensive by sellers.

Consumer discretionary stocks stand out for their weakness following a report showing consumer spending increased but mainly due to higher prices, and real disposable income fell in Feb vs Jan. Oil retreats, which weighs on DJIA component Chevron; IBM, Home Depot also among the average’s leading dollar decliners. All three major indexes end at session lows. DJIA falls 22.71 to 12197.88, and Nasdaq slips 12.38 to 2730.68. S&P 500 ends 3.61 lower at 1310.19.

Trading volume again was weak, which isn’t a great sign for bulls. Via Newswires’ Tomi Kilgore, Miller Tabak technical analyst Phil Roth noted this morning that volume during the recent rally has fallen “from moderately low levels to very low levels…suggesting the rally was mainly a function of traders reversing bearish positions, with little evidence of investment buying by traditional institutions or by the public.” Without increased upside volume, Roth said “the short-term rally is likely to become a top-broadening affair.”

Tomi also noted that while the DJIA today failed to break resistance in 12250-12280 range, “bulls can take some comfort knowing the Dow Jones Transportation Average is still up, and firmly above a similar resistance area.”

More from Tomi:

DJIA closes down 22 at 12198. The intraday high of 12273 was within the 12250-12280 resistance range where there were several intraday highs during the early-March consolidation range. Failing at that resistance preceded the DJIA’s 600-point drop in five sessions to a fresh 2011 low on March 16. But DJTA gains 22 to 5229, off a high of 5254, above its early-March resistance range at 5165-5195.

It is perhaps adding some much needed context to current (and currently under seige) rally to realize that all of the Dow’s biggest one-day percentage gains this year have come since the selloff from the April highs began. Granted, this current rally, at six consecutive sessions, looks good (although it also looks like it may not be extended to number seven.) Of course, it comes on the heels of two-week sell-off, and, it’s just one more rally the past two months that has led to…more selling.

Newswires Tomi Kilgore reports: (subscription required)

Being fooled twice is enough to shame any investor, but how about three, or even four times?

The current rally marks the fourth time since early May that the Dow Jones Industrial Average has bounced more than 5%. Previous bounces have taken the Dow above key resistance levels, and yet subsequent declines have resulted in even lower lows. Essentially, the recent pattern surrounding key technical breakdowns and breakouts suggests the Dow is nearing yet another turning point.

It is easy for bulls to fall into another technical trap, since the Dow has climbed above the 50-day simple moving average, which has acted as resistance since the Dow first fell below it in early May, and is now peeking above a downward sloping line that started at the April 26 high and connects the June 21 high. But rather than embolden bulls, the apparent breakout should actually make them skeptical, especially following a six-session rally.

There have been several false breakdowns and breakouts since the correction started in late April.

The most notable thing about yesterday’s rally may have been this: despite a strong run for the entire morning and afternoon, when the major indexes hit resistance points late in the afternoon, around 10400 on the Dow and 1100 on the S&P 500, they weren’t able to breach them.

- S&P 500 posts biggest gain in more than a month. But keep an eye on the index at these levels as it may face sturdier chart resistance ahead, Bill Luby cautions.

- US Dollar’s uptrend hits a bit of a rough patch this week.

- The economy’s still too lame for Bernanke to hint at rate changes.

- It’s hard to ignore that Elevation Partners has invested about 25% of its $1.8 billion fund in Palm. “Basically, if you invest 15% or more of your portfolio in a single company, you are just begging to be knocked to the ground,” Dan Primack notes at PE Hub.

- Spending more on prescription-drug commercials doesn’t necessarily mean TV viewers will remember your ads.

- Abercrombie’s wacky 8-K raises some eyebrows.

- Google (GOOG) offers small fix for Twitter Search, allowing users to sift through archived tweets and pull results from a particular time period. “That’s not nearly enough to fix Twitter search, but it is cool,” Peter Kafka says. “And probably useful, in some situations.”

- “We got into this mess because we had an over-financialized economy, with finance making a share of profits out of all proportion to its actual economic contribution,” Paul Krugman writes. “And now it’s baaack.”

- S&P 500 year-to-date gains bode well for the remainder of 2010.

- Greece’s tedious tale needs an ending. “Markets are officially bored of Greece — and that’s a bad place for it to be right now,” FT”s Alphaville says.