FRIDAY'S MARKET WRAP-UP
Market Snapshot for November 5, 2011 (4:22 a.m. ET):
Closing Prices: DOW 11,983.24 (-61.23, -0.51%), S&P 500 1,253.23 (-7.92, -0.63%), NASDAQ 2,686.15 (-11.82, -0.44%), Nikkei 225 8,801.40 (+160.98, +1.86), DAX 5,966.16 (-167.02, -2.72%), FTSE 5,527.16 (-18.48, -0.33%)
OIL 94.26, GOLD 1,756.10, SILVER 34.084
EURO 1.3794, YEN 78.23, BRITISH POUND 1.6029, U.S. DOLLAR INDEX 77.16
Market Sells Off Following Employment Reports
Trading was in a holding pattern heading into Friday morning as market participants patiently awaited last month's employment data. The range heading into the news had a slightly bearish bias despite forming at highs due to the extreme upside that took place on Thursday and a shift in momentum within the range itself heading into Friday morning. This bias was then aided by a dismal response to the premarket news. Even though the unemployment rate slipped from 9.1% to 9.0% in October, job creation was still underwhelming. Nonfarm payrolls fell 5,000 short of the 85,000 that had been anticipated. Nonfarm private payrolls were up 104,000, which was also less-than-anticipated.
Once the news sunk in, the market sunk as well. The selloff continued throughout the first half of the morning, but finally found support from Tuesday's highs. The indices reversed course mid-day, but the reversal was a sloppy one with a lot of price overlap and congestion before finally pulling higher out of the 13:00 ET correction period.
Dow Jones Industrial Average (Figure 1)
The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 61.23 points, or 0.51%, and closed at 11,983.24. Only five of the Dow's index's thirty components posted a gain after the market reversed course once again into the weekend. The top performers were McDonalds (MCD) (+0.87%) and Alcoa (AA) (+0.55%). The weakest was Bank of America (BAC), which posted a loss of 6.08%. It was followed by Intel (INTC) (-1.90%), General Electric (GE) (-1.68%), and Kraft Foods (KFT) (-1.68%). The index ended the week lower by 2.03%.
The S&P 500 ($SPX) finished the session with a loss of 7.92 points, or 0.63%, and closed at 1,253.23. The strongest individual percentage performer in the index was Genworth Financial Inc. (GNW) (+16.72%). Other top gainers included Starbucks (SBUX) (+6.74%), United States Steel Corp. (X) (+5.16%), and AK Steel (AKS) (+4.26%). The weakest were Chesapeake Energy (CHK) (-6.75%), Flour Corp. (FLR) (-6.38%), Bank of America (BAC) (-6.08%), and Windstream Corp. (WIN) (-5.43%). The index fell 2.48% for the week.
The Nasdaq Composite ($COMPX) ended the session lower by 11.82 points, or 0.44%, on Friday and it closed at 2,686.15. The top index components in the Nasdaq-100 ($NDX) were Illumina Inc. (ILMN) (+6.78%), Starbucks (SBUX) (+6.74%), and Seagate Technology (STX) (+6.07%). The weakest were Warner Chilcott (WCRX) (-7.40%), Netflix (NFLX) (-2.46%), and Comcast Corp. (CMCSA) (-2.44%). The Nasdaq Composite ($COMPX) ended the week lower by 1.86%.
S&P 500 (Figure 2)
Refocusing on Earnings... Maybe...
While the biggest weeks for earnings are now behind us and announcements are starting to taper off, this week will still be a busy one. Earnings to watch for include Walt Disney (DIS), General Motors (GM), Macy's (M), Nvidia (NVDA), Cisco Systems (CSCO), and Nordstrom (JWN).
The conclusion of last week's G20 meeting and a vote of confidence from Greek's parliament on Friday for its prime minister will hopefully start to move some of the focus away from Europe and the teeter-totter of news reports that have swung the market wildly from one day to the next in recent weeks. Although the latest out of Europe, including Greece's push over the weekend for governmental reforms, and concerns over Italy's future following rumors that its prime minister was on the verge of resigning, have continued to impact trade early this week. Italy is the euro-zone's third largest economy.
The index futures had a strong open to trade on Sunday evening, but fell sharply back to Friday's lows before turning higher once again in early premarket trade to recover most of the losses as we approach Monday's opening bell. Despite an upper-level base on the 30-minute charts though, the larger time frame action makes this trading range susceptible to holding highs in the early morning intraday since the pull off lows will create exhaustion into last week's highs and larger trend resistance from highs last month will limit upward mobility early this week even if the market can managed to shift momentum later on to push through last week's highs.
Nasdaq Composite (Figure 3)
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.