Stocks rallied for the fourth day in a row on Friday, led by health-care and retail names following reversals by the financial sector earlier in the week. But the advance on Friday lacked the earlier enthusiasm with lighter volume and more targeted selling.
Talk of reinstating the uptick rule and eliminating the “mark to the market” accounting standard for banks attracted buyers. But despite all of the talk, no one came forward to say that either of these proposals was being seriously discussed by those who make policy.
With little news to drive stocks, short-covering prior to the weekend kept upside pressure on the market. One piece of financial news was the easing of the trade deficit, which under normal circumstances would be viewed positively, but now it may just be a reflection of a sluggish world economy and that is not good.
At the close, the Dow Jones Industrial Average (DJI) rose 54 points to 7,224, the S&P 500 (SPX) gained six points to 757, and the Nasdaq (NASD) rose five points, closing at 1,431.
The New York Stock Exchange traded 1.6 billion shares, with advancers ahead of decliners by about 5-to-4. On the Nasdaq, 770 million shares traded with advancers ahead by 7-to-5.
For the week, the Dow gained 9%, the S&P 500 was ahead by 10.7%, and Nasdaq rose 10.6%. For the year, the Dow is off 17.7%, the S&P is off 16.2%, and Nasdaq fell 9.2%.
On Friday, the April crude oil contract fell 78 cents to $46.25 a barrel on rumors that OPEC may not cut production, and the Amex Energy SPDR (XLE) fell 38 cents to $45.50.
The April gold contract rose to $930.10, up $6.10, buoyed by demand for Exchange-Traded Funds (ETF). The PHLX Gold/Silver Index (XAU) rose $1.78 to $122.22.
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What the Markets Are Saying
After four consecutive days of higher prices, the major averages are within sight of the major support from which they broke down in February — it’s now the most significant resistance.
The first pocket of resistance made itself known on Friday — that being the five days of trading from Feb. 20 to Feb. 26 between S&P 500 (SPX) 742 and 780. And after that comes the massive overhead which starts at 800 and runs to over 900.
The run from the low of 667 on March 3 resulted in a gain of 13.6% for the S&P 500. That is an extraordinary advance despite the fact that most of it resulted from a deeply oversold condition and a subsequent run on the shorts.
But bear-market rallies can be explosive and, historically, some have even exceeded 20%, only to reverse and set new lows after sucking the public into a vacuum of hype by analysts and the press.
As the S&P 500 approaches what should be significant resistance this week, the market will also encounter some of the most important economic and earnings reports of the month.
Today, the Industrial Production report, and on Tuesday the Fed will release its statement on monetary policy. Tuesday also brings Building Permits, Housing Starts, and the Producer Price Index (PPI). Wednesday will deliver Core PPI and the Consumer Price Index (CPI), and Thursday brings General Electric’s (GE) report on the health of GE Capital, Initial Claims and Leading Indicators.
If the market can weather all of these potential bombshells and drive into the overwhelming resistance just ahead, then perhaps the bulls can make a case for a bottom. But until then, the stock buyers look like more bear meat.
Today’s Trading Landscape
Earnings to be reported include: 4Kids Entertainment, American Apparel, Asbury Automotive Group, Ballantyne Omaha, BMP Sunstone Corp, Care Investment Trust, Century Casinos, China Information Security Technology, China Nepstar Chain Drugstore Ltd, Chinacast Education Corp, Connecticut Water Service and Cumulus Media.
Dana Holding Corp, Deerfield Capital Corp, Education Realty Trust, Emeritus Corp, ENGlobal, Facet Biotech Corp, Flanders, Flotek Industries, Force Protection, Fortress Investment Group LLC, FX Energy, Gray Television, GSE Systems and Houston Wire & Cable Co.
IDT Corp, Independence Holding, KapStone Paper and Packaging Corp, Kohlberg Capital Corp, Landry’s Restaurants, Medivation, Molecular Insight Pharmaceuticals, National Dentex and Newcastle Investment Corp.
Patriot Capital Funding, Procera Networks, Patriot Capital Funding, Procera Networks, Providence Service Corp, Puda Coal, Repros Therapeutics, Rockwell Medical Tech, Sauer-Danfoss, SINA Corp, SkillSoft Corp, Sonic Automotive, Star Bulk Carriers Corp, Sterling Construction Co, The PMI Group, and U.S. Home Systems.
The following economic reports are due today: March Empire State Fed Manufacturing Survey (the consensus expects negative 31.70), January Treasury International Capital, February Industrial Production (the consensus expects a 1.0% drop), February Capacity Utilization (the consensus expects 71.4%), and the March NAHB Housing Index.
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