Courtesy of John Nyaradi.

An economic slowdown in Japan and the absence of any significant economic reports kept stocks in a holding pattern on Monday.

Stocks had a relatively quiet, summer day on Monday, with the Dow and S&P 500 dipping a toe into the red, while the Nasdaq and Russell 2000 advanced.  The Treasury Department’s monthly budget statement for July brought the only economic news, as it exceeded economists’ expectations of a $96.0 billion deficit by $1.6 billion.

Japan’s economic slowdown was the story of the day, as it hit stock prices in Europe as well as Japan.  Japan’s Cabinet Office reported that the nation’s GDP expanded at an annual rate of 2.6 percent during the second quarter, compared with an upwardly-revised 3.8 percent expansion during the first quarter.  Economists were expecting to see second quarter GDP expand at a 3.6 percent rate.  The Nikkei 225 Stock Average fell 0.70 percent to 13,519 (NYSEARCA:EWJ).

The Dow Jones Industrial Average (NYSEARCA:DIA) lost 5 points to finish Monday’s trading session at 15,419 for a 0.04 percent decline.  The S&P 500 (NYSEARCA:SPY) slipped 0.12 percent to close at 1,689.

The Nasdaq 100 (NASDAQ:QQQ) advanced 0.24 percent to finish at 3,125.  The Russell 2000 (NYSEARCA:IWM) climbed 0.50 percent to end the day at 1,053.

In other major markets, oil (NYSEARCA:USO) rose 0.48 percent to close at $37.77.

On London’s ICE Futures Europe Exchange, October futures for Brent crude oil  advanced by 92 cents (0.86 percent) to $107.79/bbl. (NYSEARCA:BNO).

December gold futures advanced by $23.20 (1.77 percent) to $1,335.40 per ounce (NYSEARCA:GLD).

Read “Silver Breakout in the Mix?”

Transports rolled ahead during Monday’s session, with the Dow Jones Transportation Average (NYSEARCA:IYT) advancing 0.21 percent.

In China, stocks rallied after the nation’s Securities Regulatory Commission and the Ministry of Land and Resources announced that financing for real estate projects will become available.  The financial sector led the advance which built on the momentum of Friday’s better-than-expected report on industrial production.  The Shanghai Composite Index jumped 2.39 percent to close at 2,101 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index soared 2.13 percent to finish the session at 22,271 (NYSEARCA:EWH).

Japan’s economic slowdown spooked European investors, who have been awaiting release of Eurozone GDP data from the European Union’s Statistics Office on Wednesday.  Many economists are expecting to see that the Eurozone’s GDP expanded at a rate of 0.2 percent during the second quarter, ending a six-quarter streak of contraction (NYSEARCA:VGK).

The Euro STOXX 50 Index finished Monday’s session with a 0.05 percent advance to 2,827 –rising further above its 50-day moving average of 2,692.  Its Relative Strength Index is 69.20 (NYSEARCA:FEZ).

Read “Stocks Fall as Japan’s GDP Disappoints”

Technical indicators reveal that the S&P 500 remained above its 50-day moving average of 1,653 despite finishing Monday’s session with a 0.12 percent decline to 1,699.  At this point, bears are hoping to see the formation of a head-and-shoulders pattern on the S&P chart.  Its Relative Strength Index dropped from 56.59 to 55.39.  The MACD is below the signal line and both are on a downward trajectory, suggesting a continued decline.

Read “Things Are Looking Iffy, What Do the Market Models Say?”

For Monday, all sectors were in negative territory except for the technology and industrial sectors, which advanced 0.66 percent and 13 percent, respectively.  The utilities sector took the hardest hit, falling 0.54 percent.

Consumer Discretionary (NYSEARCA:XLY):  -0.13%

Technology:  (NYSEARCA:XLK):  +0.66%

Industrials (NYSEARCA:XLI):  +0.13%

Materials: (NYSEARCA:XLB):  -0.15%

Energy (NYSEARCA:XLE):  -0.42%

Financials: (NYSEARCA:XLF):  -0.39%

Utilities (NYSEARCA:XLU):  -0.54%

Health Care: (NYSEARCA:XLV):  -0.41%

Consumer Staples (NYSEARCA:XLP):  -0.29%

Bottom line:  The Dow and the S&P 500 dipped slightly into the red on Monday, as the only economic news was the monthly budget statement from the Treasury Department which indicated that the monthly deficit for July exceeded the anticipated $96 billion by 1.66 percent.

Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector