Good day! The index futures were trading slightly higher in premarket action heading into Friday morning's jobs data, but as soon as the news hit the wires things fell apart. The index futures fell sharply at 8:30 a.m. ET when the report on U.S. job growth in November came back slower than expected. 39,000 Jobs were added in November, but this dramatically undercut the expected gain of 150,000 to 200,000 jobs. Meanwhile the unemployment rate rose once again, climbing from 9.6% to 9.8%, while the longer-term unemployment rate was unchanged at 17%.
Dow Jones Industrial Average (Figure 1)
Prices began to rebound at 9:00 a.m. ET and gained momentum out of the opening bell, but the market put the brakes on the rally at 10:00 a.m. ET when the government's report on factory orders showed a decline of 0.9% in October. It was the first pullback in four months. Factory orders were up 2% in September, but the data was better than the 1.3% decline economists were anticipating. Nevertheless, the Institute for Supply Management's index on manufacturing activity rose by more than expected from 54.3 in October to 55.0 in November.
The market pulled lower out of the 10:00 a.m. ET data, but the selling was minor and the indices held the morning lows. A narrow and light volume trading range formed that lasted throughout the majority of the session. By the end of the day the markets were starting to show better signs of strength, holding up with slower pullback action off the upper end of the range. Prices were still overly extended on the 60 minute charts on the upside, however, and it made it difficult for the bulls to gain a firm foothold. They closed in the area of November's highs, but it will remain difficult for the bulls to gain momentum on the upside in the week ahead.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) had a gain of 19.68 points, or 0.17%, and closed at 11,382.09 on Friday. The mixed session left the buyers and sellers fairly evenly matched by the end of the day. The top performers were Bank of America (BAC) (+1.54%), DuPont (DD) (+1.25%), Alcoa (AA) (+0.99%), and Caterpillar (CAT) (+0.86%). The weakest stocks were Cisco (CSCO) (-0.78%), Coca-Cola (KO) (-0.62%), and Travelers (TRV) (-0.45%). The Dow ended the week higher by 2.62%. Year-to-date it is up 9.12%.
The S&P 500 ($SPX) rose 3.18 points, or 0.26%, and closed at 1,224.71. International Game Technology (IGT) (+4.95%) was the strongest stock in the index, followed by National Semiconductor (NSM) (+4.68%), Office Depot (ODP) (+4.49%), and Airgas Inc. (ARG) (+4%). The weakest included Big Lots (BIG) (-5.11%), Sunoco Inc. (SUN) (-3.93%), Nicor (GAS) (-3.80%), and Supervalu Inc. (SVU). BIG fell after it reported disappointing profits and a weaker-than-expected outlook. The S&P 500 ended the week higher by 2.97% and it is up 9.81% year-to-date.
The Nasdaq Composite ($COMPX) ended the session higher by 12.11 points, or 0.47%, on Friday and it closed at 2,591.46. This was the best close in the Nasdaq in nearly three years. The best performers in the Nasdaq-100 on Friday were Garmin Ltd. (GRMN) (+4.12%), Warner Chilcott (WCRX) (+3.53%), and Seagate Tech. (STX) (+3.10%). The weakest were Broadcom Corp. (BRCM) (-1.70%), Gilead Sciences (GILD) (-1.19%), Verisign Inc. (VRSN) (-1.02%). The Nasdaq Composite was up 2.24% for the week and is up 14.2% year-to-date.
Nasdaq Composite (Figure 3)
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group, Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.