S&P 500 (Figure 2)
Despite the strength into Friday's open, it came as no surprise that the market struggled to hold onto those gains throughout the remainder of the session. As I mentioned in Friday's column, we expected the rally to "slow as traders move to the sidelines ahead of the weekend." In the current global environment, where most of the unexpected news has been bad news, investors are leery holding overnight, let alone into the weekend.
The Dow held onto the most of gains on Friday, while the technology-heavy Nasdaq struggled, but the back and forth action throughout the session still made it a very favorable one for intraday traders. Support and resistance levels held well and trend moves and follow-through on popular trading strategies provided daytraders with decent returns despite increased volatility due to triple witching. The session ended near intraday lows.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a gain of 83.93 points, or 0.71%, and closed at 11,858.52 on Friday. Twenty-six of the Dow's thirty index components posted a gain. The top performers were JP Morgan (JPM) (+2.65%), Caterpillar Inc. (CAT) (+1.88%), American Express (AXP) (+1.73%), and Pfizer (PFE) (+1.51%). The losers were Travelers Companies (TRV) (-1.06%), McDonalds (MCD) (-0.56%), Exxon Mobil (XOM) (-0.38%), and Hewlett-Packard (HPQ) (-0.27%). The Dow Jones Ind. Average ended the week lower by 1.54%. The Dow is up 2.43% year-to-date.
The S&P 500 ($SPX) rose 5.48 points, or 0.43%, and closed at 1,279.20. The strongest industry group on Friday was the financials. Several big banks on Friday were granted the go-ahead to raise dividends following the completion of stress tests on their capital. Wells Fargo & Co. (WFC), U.S. Bancorp (USB), and BB&T Corp. (BBT) were among those that announced dividend increases on Friday. Some argue that it is too soon to allow the banks to increase dividends and that the financial sector in general is not yet stable enough given the current state of the economy, which is still struggling substantially to recover.
Lorillard Inc. (LO) (+10.57%) was the strongest percentage performer in the S&P 500 on Friday. Other top performers were Centerpoint Energy Inc. (CNP) (+9.67%), Motorola Mobility Holdings (MMI) (+5.00%), SunTrust Banks (STI) (+4.74%), and Supervalu (SVU) (+4.36%). The biggest losers were Nike Inc. (NKE) (-9.16%), F5 Networks (FFIV) (-6.23%), JDS Uniphase (JDSU) (-6.10%), Polo Ralph Lauren Corp. (RL) (-3.62%), and AES Corp. (AES) (-3.45%). Nike's (NKE) followed disappointing profits, which it attributed to rising oil and cotton prices. The S&P 500 ended the week lower by 1.92%. It still remains up 1.71% year-to-date.
The Nasdaq Composite ($COMPX) ended the session higher by 7.62 points, or 0.29%, on Friday and it closed at 2,643.67. The strongest performers in the Nasdaq-100 were Netapp Inc. (NTAP) (+3.64%), Intuit (INTU) (+3.08%), Dell Inc. (DELL) (+2.83%), and Millicom Intl. Cellular (MICC) (+2.34%). The weakest were F5 Networks (FFIV) (-6.23%), First Solar (FSLR) (-2.82%), Netflix Inc. (NFLX) (-2.10%), and Citrix Systems (CTXS) (-1.65%). The Nasdaq Composite was down 2.65% and is now down 0.35% year-to-date.
On the data front, the first half of the week will be focused on real estate. On Monday the National Association of Realtors will release the February existing home sales data. This will be coming out at 10:00 a.m. ET. Economists are expecting sales to fall to an annualized rate of 5.05 million compared to 5.36 million in January. Then on Tuesday at 10:00 a.m. ET is the FHFA Housing Price Index. This is followed on Wednesday at 7:00 a.m. ET by the MBA Mortgage Index and the 10:00 a.m. ET new home sales data.
The earnings docket is light this week, but some names to keep an eye on are Tiffany & Co. (TIF) on Monday; Carnival (CCL), Dollar General (DG), Walgreens (WAG), Adobe Systems (ADBE), and Discover (DIS) on Tuesday; General Mills (GIS) on Wednesday; Best Buy (BBY), GameStop (GME), Lennar (LEN), Oracle (ORCL), and Research In Motion (RIMM) on Thursday; and KBHome (KBH) on Friday. Both Tiffany & Co. (TIF) and Oracle (ORCL) have high levels of exposure in Japan and investors will be watching for affects upon the companies resulting from Japan's economic distress.
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.