Good day! With earnings season now in full swing, most eyes have been on the latest numbers, which provided a great deal of relief in last week's shortened trade. The market rebounded strongly from Monday's selloff, cheering the earnings releases that followed throughout the week. Nevertheless, the U.S. markets were closed on Friday for a three-day holiday weekend and action on Thursday was fairly relaxed.
Dow Jones Industrial Average
The bulls held onto the gains they made after hours on Wednesday with earnings, but profit-taking ahead of the weekend kept them in check intraday. Three of the morning's biggest movers were Apple (AAPL), General Electric (GE), and Morgan Stanley (MS). All three were up ahead of the open following their earnings announcements, but it was only Apple (AAPL) (+2.4%) that managed to hang onto those gains. Apple alone was responsible for about 12 points in the gains made in the Nasdaq-100 index, which ended the session higher on Thursday by 17.65 points, or 0.63%, at 2,802.51. It was up 2.01% for the week.
Netapp Inc. (NTAP) (+4.12%) and Netflix (NFLX) (+3.19%) followed Biogen Idec (BIIB) (15.17%) and F5 Networks (FFIV) (+7.15%) at the top of the Nasdaq-100. The weakest performers in the index were Teva Pharmaceutical Inds. (TEVA) (-8.46%), Lam Research (LRCX) (-5.88%), and KLA-Tencor (KLAC) (-4.55%).
All three of the major indexes remained relatively close to their opening prices by the end of the session, following a choppy and difficult day of trade for dayt raders. The main cause of the difficultly was that the market had no desire to give up its opening gains, but the bullish sentiment following the strong earnings run kept the bears in line and the indexes offered very little for decent intraday setups on even a five-minute time frame, as you can see in the charts throughout this column. The 5-minute 20-period moving average served as strong support for pivot plays in the morning, but continuation moves lacked follow-through due to the larger daily extension in the overall market and looming holiday weekend.
Not all news was good news on Thursday, however, and this also held back the bulls. The Philadelphia Fed's manufacturing index indicated a slowdown in U.S. manufacturing for the month of March.
Several stocks also weighed heavily on the Dow. Although General Electric (GE) (-2.21%) has a strong open, the gains were rapidly eroded on concerns of slow growth. Pfizer (PFE) (-2.94%) was then slammed mid-day following a report of fatalities linked to a rheumatoid arthritis drug test. Verizon (VZ) (-2.33%) topped off the losers list in the Dow due to the soaring costs associated with the activation of the iPhone on its network. The Dow Jones Industrial Average ($DJI) ended the day a gain of 52.45 points, or 0.42%, and closed at 12,505.99 on Thursday, up 1.33% on the week. Two-thirds of the Dow's thirty index components posted a gain on the final trading day of the shortened week last week. The top performers were Travelers (TRV) (+3.70%), IBM (IBM) (+2.14%), Alcoa (AA) (+1.98%), and AT&T (T) (+1.83%).
The S&P 500 ($SPX) rose 7.02 points, or 0.53%, and closed at 1,337.38. The S&P ended the week higher by 1.34%. Biogen Idec (BIIB) (+15.17%) was the strongest performer in the S&P 500 with a gain of 15.17% after the world's largest maker of multiple sclerosis medicines released positive data from the final stage of studies for a new pill designed to reduce flare-ups. The second-strongest performer was SLM Corp. (SLM) (+12.79%), which topped earnings expectations and announced its first dividend payment since 2007. Other top gainers were United Health Group (UNH) (+8.07%), F5 Networks Inc. (FFIV) (+7.15%), and JDS Uniphase (JDSU) (+5.76%). The weakest performers were Xerox Corp. (XRX) (-5.81%), KLA-Tencor (KLAC) (-4.55%), Pulte Group (PHM) (-4.54%), and Amgen Inc. (AMGN) (-4.43%).
In other markets, the U.S. dollar made headlines by hitting its lowest point since 2008 with the U.S. dollar index falling through 74 intraday for a low of 73.935. Gold and silver, meanwhile, were both higher once again, as was crude oil, which is up 5.22% so far this month. Gold is up 4.44% this month, while silver is up an astounding 21.46%.
Following last week's gains, we should expect a slowdown this week. It will be difficult for the bears to regain the upper hand on the daily time frame very quickly, but the bulls will find the path more difficult as well. Securities focused on earnings and other news, as well as those in the same sector, will garner the most interest.
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.