Investors seemed as conflicted as the economic reports on Friday. The major indices closed mixed following a week of gains, and selling in the financial sector halted a 10-day winning streak.
The opening was strong following a 0.3% increase in retail sales and a 0.8% increase ex-autos for February, when economists had been looking for a decline of 0.2% for total retail sales and a 0.1% increase in sales ex-autos.
But the early gains vanished when the University of Michigan’s preliminary consumer sentiment survey for March came in at 72.5 instead of the expected 74.
All four of the big financial stocks that led the market earlier in the week turned down. And Citigroup (C), which had a good run thanks to rumors that the government was going to unload its shares, fell 5%.
Stocks making large moves included: Aeropostale (ARO), up 4.2% on better earnings; Citigroup, off 5% on a “neutral” rating by Oppenheimer; Pall Corp. (PLL), down 4.8% after missing analysts’ estimates; Abbott Labs (ABT), down 1.8% on a rating cut by Citi; and SuperValu (SVU), up 6.6% on rumors that it was the target of a leveraged buyout.
The U.S. dollar weakened against the yen and the euro on Friday.
The Dow Jones Industrial Average (DJI) gained 13 points to 10,625, the S&P 500 (SPX) fell fractionally to 1,150, and the Nasdaq (NASD) fell a point to 2,368.
The NYSE traded less than 1.1 billion shares with advancers leading decliners by 8-to-7. On the Nasdaq, decliners were ahead by 7-to-6 on volume of 573 million shares.
Crude oil for April delivery fell 87 cents to $81.24 a barrel because of conflicting signals on the U.S. economy. The Energy Select Sector SPDR (XLE) rose 3 cents to $58.50.
April gold fell $6.50 to $1,101.70 an ounce on signs of a stabilization of the economic problem in Greece. The PHLX Gold/Silver Sector Index (XAU) fell 1.2 points to 166.04.
What the Markets Are Saying
“What an interesting market,” one analyst was heard saying while another opined that he could do with less interest and more gains. I’m sure that’s how many investors feel as the S&P 500 has become temporarily “stuck” at the top of its 2010 peak made on Jan. 15 and 18. Friday, the index closed at 1,149.99.
A high-breadth, high-volume advance from here would confirm that the primary uptrend of the market is still intact. But a failure to make a new high could create a double-top with the possible implication of an intermediate turn down or a sideways trend for an indeterminate time — and no one wants to see either occur.
Initial support for a move down is at 1,125, with major support at the conjunction of the 20- and 50-day moving averages at around 1,112.
The Dow’s view is somewhat like the S&P 500, but is weaker since it has not yet reached the January peak of 10,736. However, the Dow did penetrate its March peak Friday, and because that gain keeps the current uptrend intact for the Dow, it is a mild positive.
But there is significant overhead at the former high, and that overhead is greatly influenced by three Dow components: IBM (IBM), 3M (MMM), and Chevron (CVX), and they are the three highest-priced Dow members.
The Nasdaq, of course, has broken its January high and is the strongest of the major indices. But whether this is good news for the market remains to be seen since old-timers (like me) think of Nasdaq as the more “speculative” of the major indices, and therefore is usually bought by the public and traders. In other words, it’s in “weaker hands” than the senior indices. But newer theory holds that there are many quality stocks in the Nasdaq, so the old rules no longer apply. We will see.
Meanwhile, lots of other important indices have broken to new highs, including the Dow Jones Transportation Average (DJT), technology and financial indices, the Russell 2000 (RUT) and the S&P MidCap 400 Index (MID).
Stay tuned because the pressure is building, and this could be “the week that was.”
Today’s Trading Landscape
Earnings to be reported before the opening include: AAON, American Oriental, Global Sources, GTX, Houston Wire & Cable, RadNet, Schawk and Sterling Construction.
Earnings to be reported after the close include: AthenaHealth, Emeritus Corp., Geokinetics, HQ Sustainable Maritime Industries, Medivation, Seaspan and Sequenom.
Economic reports due: Empire State Manufacturing Survey (the consensus expects 22), Treasury International Capital (TIC), industrial production (the consensus expects 0% for production and 72.4% for capacity utilization rate), and housing market index.
Related Articles:
- Sweet 16 Option Trades
- Profit From Greece’s Short-Term Recovery With NBG Calls
- 7 Ways to Tell a Stock is Headed Down
The Options Trader’s Guide to Technical Analysis
In his latest report, learn how John Lansing leverages the power of technical analysis to identify the short window when a trade is set to go straight up or down. Get your FREE copy here!
