Given the current price action in the markets, I am expecting the indices to trade primarily within a larger trading range over the next several weeks. There is the potential for a slightly higher high, but this is the most likely in the Dow. Gold, silver, and oil all have similar price action.
Nasdaq Composite (Figure 3)
The Dow Jones Industrial Average ($DJI) had a gain of 50.03 points, or 0.41%, and closed at 12,220.59 on Friday. Slightly more than half of the Dow's thirty index components posted a gain on the day. The top performers were IBM (IBM) (+1.34%), Chevron (CVX) (+1.33%), Caterpillar Inc. (CAT) (+1.21%), and AT&T (T) (+1.09%). The weakest performers were Hewlett-Packard (HPQ) (-1.32%), Bank of America (BAC) (-1.04%), Microsoft (MSFT) (-0.74%), and Cisco Systems (CSCO) (-0.46%).
The S&P 500 ($SPX) rose 4.14 points, or 0.32%, and closed at 1,313.80.The strongest percentage performers on Friday were CF Inds. Holding (CF) (+4.99%), Newfield Expl. Co. (NFX) (+4.00%), Xerox Corp. (XRX) (+4.00%), Valero Energy (VLO) (+3.96%), and Western Digital Corp. (WDC) (+3.60%). The weakest percentage performers were Darden Restaurants Inc. (DRI) (-4.96%), NVIDIA (NVDA) (-3.12%), Best Buy (BBY) (-3.02%), and JDS Uniphase (JDSU) (-2.80%). Darden Restaurants (DRI), which operates Red Lobster and Olive Garden, beat earnings estimates, but indicated that rising food costs could hinder its forecast. Best Buy (BBY) continued to be hit by downgrades following its disappointing earnings report on Thursday morning, which touched on rising operating costs and decreases in same-store sales.
The Nasdaq Composite ($COMPX) ended the session higher by 6.64 points, or 0.24%, on Friday and it closed at 2,743.06. The top performers in the Nasdaq-100 were Nii Holdings (NIHD) (+3.25%), Priceline.com (PCLN) (+2.31%), Altera Corp. (ALTR) (+2.29%), Wynn Resorts (WYNN) (+2.25%), and Apple (AAPL) (+1.90%). The weakest performer was Research In Motion (RIMM), which fell -11.23% after it gave a lower-than-expected guidance for the fiscal first quarter. It was also downgraded by a number of brokerages on the heels of the news. NVIDIA (NVDA) (-3.12%), Starbucks (SBUX) (-1.81%), and Qualcomm (QCOM) (-1.81%) were the other top losers.
This is going to be a busy week on the economic data front. This week's highlighted data will be Friday's jobs report. Although the national unemployment rate fell to 8.9% last month, bets are high that it will not be able to hold that level, let alone improve, this month. The "real unemployment rate" came in at 15.9%, off 2% from its peak in February 2010. Nonfarm payrolls are expected to rise between 160,000-225,000 for March.
The week's data will kick off, however, with February's personal income and personal spending on Monday. The National Association of Realtors pending home sales report is also due out and is expected to show continuing declines. Then on Tuesday watch for more housing data with the Case-Shiller home-price index. The Conference Board's consumer confidence data is also due out on Tuesday.
Earnings are once again light this week as fourth-quarter reports wind down. First-quarter earnings season kicks off on April 11 when Alcoa (AA) releases its quarterly earnings. A few to watch this week will be Apollo Group (APOL) on Tuesday and Family Dollar Stores (FDO) on Wednesday.
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.