A solid March jobs report drove the major indices higher on Friday to close their sixth week of gains in the past seven. The Dow Jones Industrial Average and S&P 500 each rose 0.6% and the Nasdaq jumped 0.9%.
While the unemployment rate increased slightly to 5% in March, nonfarm payrolls were higher than expected, rising 215,000.
Energy stocks took another beating, falling 1.3% after a Saudi prince said his country would only cap its crude production if Iran and other major producers did the same. WTI oil fell 4% to $36.79 a barrel.
Gold was down 1% at $1,223.50 an ounce while the euro advanced 0.1% against the U.S. dollar to $1.1392.
At Friday’s close, the Dow Jones Industrial Average gained 108 points at 17,793, the S&P 500 rose 13 points to 2,073, the Nasdaq added 45 points at 4,915 and the Russell 2000 was up 4 points at 1,118.
The NYSE Composite’s primary exchange traded 984 million shares with total volume of 3.7 billion. The Nasdaq crossed 1.8 billion shares. On the Big Board, decliners exceeded advancers by 1.1-to-1, and on the Nasdaq, advancers led by 1.3-to-1. Block trades on the NYSE fell to 5,434 from 5,528 on Thursday.
For the week, the Dow gained 1.6%, the S&P 500 rose 1.8%, the Nasdaq jumped 3% and the Russell 2000 soared 3.5%.
Last week ended with a new closing high for 2016 in the Dow Jones Industrial Average. Friday brought a minor upside reversal from Thursday’s decline. But strong supporting volume was lacking and the all-time high at 18,351, achieved in May, is more than 550 points above Friday’s close.
Despite a new 2016 high in the industrials, the Dow Jones Transportation Average is not participating. In fact, in the past two weeks, the transports have lost 2.7%.
On Friday, we saw the highest negative volume during that two-week period, and the day’s low pierced the near-term bull channel’s support line, as well as the 200-day moving average at 7,819.
This recent decline in the Dow Jones Transportation Average has a lower rebound high and is set up to register a lower low, which would confirm a major turn down from the resistance line near 8,200.
Conclusion
Our readers know that I value the Dow Theory. And as a Dow Theory technician, I must be skeptical of any move by the Dow Jones Industrial Average that is not supported by the Dow Jones Transportation Average.
It is a bit early to say that we should be 100% sure of a Dow Theory non-confirmation. However, a new breakdown by the transports followed by a similar break below Friday’s low at 17,568 on industrials would negate the industrials’ recent high. The result could be a quadruple-top and a major reversal.
It is not the time to chase stocks that are making new highs since a major reversal could be just around the corner.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
