FRIDAY'S MARKET WRAP-UP
Market Snapshot for January 20, 2011 (6:23 p.m. ET):
Closing Prices: DOW 12,720.48 (+96.50, +0.76%), S&P 500 1,315.38 (+0.88, +0.07%), NASDAQ 2,786.70 (-1.63, -0.06%), Nikkei 225 8,766.36 (+126.68, +1.47%), DAX 6,404.39 (-11.87, -0.19%), FTSE 5,728.55 (-12.60, -0.22%)
OIL 98.33, GOLD 1,664.00, SILVER 31.675
EURO 1.2888, YEN 76.94, BRITISH POUND 1.5564, U.S. DOLLAR INDEX 80.405
Data Revs Up
This week is a busy one for the markets. Earnings season is in full swing and weighing heavily on market action. Earnings from tech giants IBM (IBM), Microsoft (MSFT), and Intel (INTC) were the primary reasons the Dow Jones Ind. Average ($DJI) managed to post a gain of nearly 100 points on Friday. This week's earnings include 11 Dow components. Among them are McDonald's (MCD), Apple (AAPL), DuPont (DD), Chevron (CVX), and Boeing (BA).
In addition to earnings, a number of countries will be announcing their monetary policy positions this week. These include announcements from the Bank of Japan, Reserve Bank of New Zealand, and the Federal Reserve. For the first time ever, the Federal Reserve will include an outlook on interest rates. The Fed meeting will be a two-day event, with its policy announcement due out Wednesday afternoon.
Dow Jones Industrial Average (Figure 1)
The latest housing data has been promising for those looking for an end in sight to the housing crisis. According to the National Association of Realtors, existing-home sales were up in December to an annualized rate of 4.61 million units, compared to 4.39 in November. Sales for the year were up 1.7% compared to 2010. Over 20% of the sales are to investors and foreclosure inventories remain high, but it's one of the first signs we've seen that stability is starting to return to housing.
The markets themselves have continued to climb this year, posting another weekly gain last week. The momentum in the market, however, remains weak. The indices have pulled higher, but continue to display a lot of price overlap from one session to the next except in the Dow. Nevertheless, there are no major reversal patterns forming right now to suggest that the market will not attempt a stronger test of last year's highs yet this month. The S&P 500 ($SPX) still has room to move and even the DIA is still short of that price level. A solid break of that price zone, however, is extremely unlikely without the market first offering another correction on the weekly time frame into next month.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) ended the day on Friday with a gain of 96.50 points, or 0.76%, and closed at 12,720.48. Just over half of the Dow's thirty index components posted a gain. The strongest performers were Microsoft (MSFT) (+5.65%), IBM (IBM) (+4.43%), and Hewlett-Packard (HPQ) (+3.61%). The losers were Home Depot (HD) (-1.98%) and American Express (AXP) (-1.79%). The Dow ended the week higher by 2.4%. Year-to-date, the index is up 4.12%.
The S&P 500 ($SPX) finished the session with a gain of 0.88 points, or 0.07%, and closed at 1,315.38. The top performing industry groups were the techs thanks to strong earnings from Intel (INTC), IBM (IBM), and Microsoft (MSFT), while utilities were the weakest. The top individual percentage performers were Sears Holdings (SHLD) (+13.03%), Microsoft (MSFT) (+5.65%), and Suntrust (STI) (+5.19%). The top decliners were Google (GOOG) (-8.38%), Intuitive Surgical (ISRG) (-6.10%), and Capital One Financial Corp. (COF) (-5.62%). Google (GOOG) had a rough session after its earnings fell short of analysts' estimates. The S&P 500 ended the week higher by 2.04% and is up 4.59% year-to-date.
The Nasdaq Composite ($COMPX) ended the session lower by 1.63 points, or 0.06%, on Friday and it closed at 2,786.70. The index ended the week higher by 2.8% and is up 6.97% year-to-date. The strongest performers in the Nasdaq-100 ($NDX) on Friday were Sears Holdings (SHLD) (+13.03%), Microsoft (MSFT) (+5.65%), and Monster Beverage Corp. (MNST) (+3.53%). The weakest were Google (GOOG) (-8.38%), Intuitive Surgical (ISRG) (-6.10%), and Life Technologies Corp. (LIFE) (-3.26%).
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.