The S&P 500 may have fallen in six of the last nine sessions, but it still turned in the best quarter since Q3 2009. It was also the best start of the year since 1998, and in the number of points gained it was the best start ever.
Health care, energy stocks, and consumer stocks led all others. Health care, a defensive sector, rose mainly because of the increased focus on the group as a result of the Supreme Court’s review of “Obama Care,” and energy stocks bounced following a four-day sell-off.
But the consumer stocks rose following a report from the Commerce Department that showed increased spending in February. That was followed by a University of Michigan consumer sentiment index that came in much better than expected.
At the close, the Dow Jones Industrial Average was up 66 points at 13,212, the S&P 500 rose 5 points to 1,408, and the Nasdaq fell 4 points to 3,092. Advancers were ahead of decliners on the Big Board by 1.4-to-1, and on the Nasdaq decliners were ahead by 1.2-to-1. The NYSE traded 966 million shares, while 536 million traded on the Nasdaq.
At the end of each month, I publish the 17-month moving average chart since over the years it has proven to be one of the most accurate long-term timing devices. This simple technical tool shows clearly that the recent run of 334 points is almost as successful as the prior run of 354 points from July 2010 to May 2011.
It also illustrates that bull markets have many more “corrections” than bear markets, which tend to destroy most investors in the shortest amount of time, as in the crash from late October 2007 to late March 2008, which skidded 910 points in just five months. The chart also shows that we are approaching the target of 1,440, which was the rebound high of March 2008, and the arches of the tops of two prior bull markets.
Friday’s turn up from the support line at 1,390 is encouraging since it resulted in an arching up of the fast line of the stochastic. However, what is troublesome is that the stochastic did not make a new high when the index did. This is called a non-confirmation. If the S&P 500 fails to make another new high soon and 1,390 is penetrated, look for a pullback to the next important support at 1,375.
Conclusion: We are in a bull market with the near-term, intermediate-term, and long-term trends up. Thus, any pullback — and we need one in order to form a solid line of support at 1,375 — should be used as a buying opportunity.
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.
