On Friday, stocks registered the second consecutive weekly gain for the major indices. The gains were made despite Friday’s decline for the Dow Jones Industrial Average, the S&P 500 and the Nasdaq of 0.6%. The Russell 2000 fell 0.7%.
The big news on Friday was the jump in the price of Twitter Inc (NYSE:TWTR). The stock jumped over 20% following a CNBC report that Salesforce.com, Inc. (NYSE:CRM) and Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) had an interest in buying the social media company.
But overall the market was negatively impacted by a fall in the price of crude oil. Crude (WTI) fell 4% to $44.48 per barrel as doubts mounted that oil prices could be stabilized following a reported clash between major producers over production limits.
At the close on Friday, the Dow Jones Industrial Average fell 131 points to close at 18,261, the S&P 500 fell 12 at 2,165, Nasdaq lost 34 points to close at 5,306, and the Russell 2000 closed at 1,255, down 9. The NYSE’s primary exchange traded 824 million shares with total volume of 3.2 billion shares. The Nasdaq crossed 1.7 billion shares. On the Big Board, decliners outpaced advancers by over 2-to-1, and on the Nasdaq, decliners led by 1.7-to-1. Blocks on the NYSE fell to 4,596 from 5,188 on Thursday.
For the week: The DJIA gained 0.08%, the S&P 500 rose 1.2%, Nasdaq gained 1.2% and the Russell 2000 jumped 2.6%.
The Dow industrials appear to have held at the major support line at 18,000, but the index broke from support at 18,260. On Friday it failed to penetrate the key 50-day moving average at 18,430 but did manage to hold at the support at 18,260.
Problem: The advance from 18,000 is in a recovery channel and failed to punch through the top of the channel.
Conclusion: Long term: The Dow industrials’ twin index, the Dow transports, has yet to establish a new high (9,310 old high, Nov. ’14), and the industrials are having a hard time holding onto the newly established high. In other words the Dow Theory is still in a “non-confirmed” status.
Near-term: The trend is sideways, thus continue to follow volume to point to the index’s next direction. Friday’s, just-average, downside volume is OK for the bulls as long as the recovery channel’s support line at about 18,100 holds. Keep an eye on the resistance at the 50-day moving average at 18,430 since it has become a serious obstacle marking the middle of the important trading range of 18,260 to 18,635.
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.
