The mid-day reversal off lows had slightly slower momentum than the morning's selloff, but the trend was solid and easy to follow. Both the S&P 500 and Dow Jones Industrial Average had three clear-cut waves of buying back into the closing bell and premarket highs. The three-wave rally is the easiest to see on the 5 minute Dow. The premarket resistance level led to a longer congestion at the closing highs on Sunday evening to show that the bulls still simply refuse to let go of the reins.
The Dow Jones Industrial Average ($DJI) had a gain of 29.89 points, or 0.25%, and closed at 12,092.15 on Friday. Two-thirds of the Dow's thirty index components posted a gain for the day. The top percentage performers were Kraft Foods (KFT) (+1.46%), DuPont (DD) (+1.16%), Procter & Gamble (PG) (+1.13%), and Pfizer (PFE) (+0.68%). The weakest stocks were JP Morgan Chase (JPM) (-1.91%), Bank of America (BAC) (-0.97%), General Electric (GE) (-0.92%), and Alcoa (AA) (-0.41%).
The S&P 500 ($SPX) rose 3.77 points or 0.29%, and closed at 1,310.87. JDS Uniphase (JDSU) was the stand-out in the S&P 500 on Friday, whose quarterly results strongly surpassed analysts' expectations. It rose 26.94%. Trailing in second place was Aetna Inc. (AET) (+12.47%) thanks to strong fourth-quarter profits and an increase in dividends that will be the highest in the industry. The other top percentage performers included Stericycle Inc. (SRCL) (+5.77%), Tyson Foods (TSN) (+5.69%), and RadioShack (RSH) (+5.66%). The weakest were Apartment Invt. & Management Co. (AIV) (-5.14%), Life Technologies (LIFE) (-4.16%), and United States Steel (X) (-4.07%).
The Nasdaq Composite ($COMPX) ended the session higher by 15.42 points, or 0.56%, on Friday and it closed at 2,769.30. The strongest percentage performers in the Nasdaq-100 were Stericycle Inc. (SRCL) (+5.77%), F5 Networks (FFIV) (+4.59%), Broadcom Corp. (BRCM) (+4.37%), and Garmin Ltd. (GRMN) (+4.11%). The weakest were Life Technologies Corp. (LIFE), Fiserv Inc. (FISV) (-3.27%), and First Solar (FSLR) (-2.61%).
This week is going to be a light one on the data front, but some of the U.S. news events to keep an eye on heading into Monday will be earnings from home improvement retailer Lowes (LOW), the Fed's consumer credit report for December, and President Obama's speech at the U.S. Chamber of Commerce. Tuesday will be a light day for data. Disney (DIS) is amongst those that report earnings after the bell, while Coca-Cola (KO) and Cisco Systems (CSCO) are among the highly anticipated earnings reports for on Wednesday. Federal Reserve chairman Ben Bernanke is also scheduled to testify before the House Budget Committee on Wednesday morning. Thursday's data includes the weekly report for first-time jobless claims and December's wholesale inventories. The week will wrap up on Friday with December's U.S. trade balance and the Reuters/University of Michigan consumer sentiment report.
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.