Good day! The goings-on in Egypt have been at the forefront of the world's, and hence the market's, eyes over the past several weeks. On Thursday Egypt's President Mubarak announced that he would be transferring some power to the vice president and would be stepping down in September at the end of the current term. This was met with increased dissent from a large group of Egypt's citizens, who originally began anti-government protests throughout the country several weeks ago. In response to the latest uproar, Mubarak amended his statement on Friday and declared that he would be relinquishing power as the week came to a close.
Dow Jones Industrial Average (Figure 1)
Friday's session began in negative territory, but the bias was positive from a technical standpoint due to shifting momentum in premarket trade. The index futures had been in a slow, but steady downtrend since Thursday's closing bell, but this trend found support between 5:00-6:00 a.m. ET and the premarket trading channel broke to the upside shortly thereafter. The breakout did not last long before another correction began to set in, but this was minor and held near the upper channel of the earlier downtrend, as seen on the 15 minute charts of the YM (eMini Dow futures) and NQ (Nasdaq-100 futures). It was this correction to the channel breakout that was pulling the index futures lower into the opening bell.
Although the market was in a corrective mode heading into the open, it was only minor compared to the larger trend breakout. By 9:50 a.m. ET the indices were once again pulling higher and favoring a continuation of the upside. The news out of Egypt merely accelerated that breakout, which surged on increased volume until 11:00 a.m. ET. Meanwhile, gold and oil prices fell as concerns over stability in the region waned somewhat.
S&P 500 (Figure 2)
11:00 a.m. ET is a common time of the day for a morning rally to stop to catch its breath, but the overall bias for the session remained favorable for the bulls. The Dow Jones Ind. Ave. ($DJI), which had one of the strongest breakouts, also experienced the greatest correction mid-day in terms of the percentage of the morning's rally that it retraced. By 12:30 ET it had given up about half of its intraday gains. The Nasdaq, whose morning reaction was more muted, held up best over noon and crept to new intraday highs throughout the afternoon. The S&P 500 and Dow managed to hit new intraday highs as well, but only in the final 90 minutes of trade.