Here’s Why Markets Went Nowhere Monday

U.S. stocks and ETFs get off to a weak start on concerns over Europe and technically overbought levels.

It was a down day on Wall Street for stocks and ETFs, the third down day in a row, as major U.S. indexes meandered sideways to lower again.

U.S. Stock Index ETF Summary:

Dow Jones Industrial Average (NYSEARCA:DIA) -0.15%

S&P 500 (NYSEARCA:SPY) -0.22%

Nasdaq 100 (NYSEARCA:QQQ) -0.6%

Russell 2000 (NYSEARCA:IWM) -0.44%

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In other major markets, oil (NYSEARCA:USO) fell 1.2% to $91.93/bbl and gold (NYSEARCA:GLD) dropped 0.6% to $1764.60/oz.

The week started weak overseas as Germany’s Angela Merkel and France’s Francois Holland ran into some disagreement at their weekend summit and Germany’s business climate index fell for the fifth month in a row.

Spain remains a question mark over whether or not it will formally seek a bailout and concern over global growth weighed on stocks in Europe, Asia and the United States.

Facebook (NASDAQ:FB) got killed again, down 8.6% as concern grows over its advertising power and access to a growing mobile market while Apple (NASDAQ:AAPL) fell 1.3% as its iPhone 5 sales missed expectations in spite of exceeding the number of its previous debut of the iPhone 4.

Two reports from the Dallas and Chicago Fed showed ongoing contraction in those regions but with a slightly different slant.

Tomorrow brings Case/Shiller housing prices and consumer confidence reports which will be carefully watched to gauge the strength of the housing market recovery and consumer optimism or lack thereof as we come to the end of the 3rd quarter.

On a technical basis, major U.S. stock indexes and ETFs remain overbought and at significant resistance levels with declining momentum and so are subject to a short term correction.

Bottom line:  U.S. stocks and ETFs need to digest the last few weeks’ exuberance on a technical basis and fundamentals remain troublesome with the exception of central bank largesse. Short term consolidation can be expected within the context of an ongoing bull market.

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John Nyaradi is the author of The ETF Investing Premium Newsletter.