After three days down, stocks rose modestly on Friday on both the Dow Jones Industrial Average and the S&P 500. Earlier in the week, the markets reacted negatively to a decline in iron ore demand from China. Other reports that both China and Europe were slowing led to fear of a global recession.
Despite Friday’s gains, the week saw a 1.1% loss for the Dow and a loss of 0.5% for the S&P 500. But the Nasdaq gained 0.4%. At Friday’s close, the Dow gained 35 points at 13,091, the S&P 500 gained 4 points at 1,397, and the Nasdaq rose 5 points to 3,068. Volume on the NYSE totaled 741 million shares, and the Nasdaq traded 408 million shares. On both exchanges, advancers were ahead of decliners by about 2.2-to-1.
Despite the first negative week for the Dow and the S&P500, the S&P 500 is up 11.1% in Q1, and that follows a gain of 11.2% for Q4 2011, making the combination the best since Q2 and Q3 of 2009.
Technically the major indices have held their near-term, intermediate-term, and long-term uptrends. But the Dow did have an intraday retreat under its 20-day moving average at 13,038 and the support line at 13,065, reaching a low on Friday of 12,978.
Even though the 20-day moving average is the least important of the many support lines on the charts of the three major indices, it is the second violation of it for the Dow. The first was on March 6-9 when it then bounced from support just above its 50-day moving average and ran to a new high. Perhaps it will rebound again, but it bears watching.
Of more significance than the minor intraday violation by the Dow is the support line of the S&P 500 at 1,375. A violation of that line could quickly result in a decline to the 50-day moving average (blue line) now at 1,352. Note that the stochastic of the S&P 500 mirrors that of the Dow.
This is a warning that stocks have had a strong run and are in need of a consolidation before the next big move up. As before, prepare your most-wanted stocks for your buy list. Within the next two weeks you may get an opportunity to own them.
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.
