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MARKET COMMENTARY - Friday, April 18, 2014
The major averages ended the holiday-shortened week in positive territory. The Dow and NASDAQ both rose +2.4% while the S&P 500 climbed +2.7%. Behind Thursday's gains the volume totals were reported higher than the prior session totals on both the NYSE and on the Nasdaq exchange, revealing a minor increase in institutional buying demand. Advancers led decliners by almost a 3-2 margin on the NYSE and 9-5 on the Nasdaq exchange. There were 32 high-ranked companies from the CANSLIM.net Leaders List that made new 52-week highs and appeared on the CANSLIM.net BreakOuts Page, up from the total of 22 stocks on the prior session. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were gains for 3 of the 4 high-ranked companies currently included on the Featured Stocks Page, a list that has grown shorter as numerous leaders have broken down in recent weeks. The Market (M criteria) pullback earned the label of a "correction" as a result of recent pressure on the indices. Graphs in the commentary below illustrate that recent weeks have been especially tough on many stocks which were high-ranked leaders in the previous rally. This is precisely how the fact-based investment system prompts investors to reduce their overall market exposure during weak periods.
Stocks finished little changed on Thursday. The Dow fell 16 points to 16,408. The S&P 500 was 3 points higher at 1,864. The NASDAQ rose 9 points to 4,095. The U.S. stock market is closed in observation of Good Friday for the Easter holiday.
PICTURED 1: The IBD 85-85 Index is now -10.78% off its all-time high after finding support at its longer-term 200-day moving averages (DMA) line. Its Relative Strength line versus the benchmark S&P 500 Index hit its peak in late-February. Since then it has been slumping downward reflecting the fact that many high-ranked stocks have suffered big pullbacks in recent weeks.The major averages ended the session mixed as investors weighed a mixed bag of corporate profit releases. Shares of General Electric (GE +1.7%) after posting quarterly results above consensus estimates. Google (GOOGL -3.7%) as revenues fell short of analyst projections. Seven of 10 sectors in the S&P 500 were higher on the session. Energy was the best performing group. Chevron (CVX +1.5%). Utilities were down the most with Southern Company (SO -1.5%).
Investor attention was also on Ukraine. Stocks edged higher after a meeting of representatives from the European Union, Russia, Ukraine and the U.S concluded with an initial agreement to calm the conflict. On the economic front, weekly jobless claims rose modestly to 304,000, less than the 315,000 consensus projection.
Treasuries fell sharply with the 10-year note down 25/32 to yield 2.72%.
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PICTURED 2: The S&P 500 Index managed to rebound above its 50-day moving average (DMA) line and finished within -1.74% of its all-time high hit on 4/04/14.
Energy-related shares had a positive bias as the Integrated Oil Index ($XOI +0.77%) and the Oil Services Index ($OSX +1.00%) rose. The Broker/Dealer Index ($XBD +1.09%) posted a gain while the Bank Index ($BKX -0.40%) edged lower. The Networking Index ($NWX +1.31%) and the Semiconductor Index ($SOX +1.85%) posted solid gains while the Biotechnology Index ($BTK -0.11%) lagged the rest of the tech sector. The Retail Index ($RLX +0.12%) edged higher. The Gold & Silver Index ($XAU -0.72%) was a laggard with a modest loss.
Charts courtesy www.stockcharts.com
PICTURED 1: The Broker/Dealer Index ($XBD +1.09%) posted a 4th consecutive gain while rebounding from support at its longer-term 200-day moving average (DMA) line.
Charts courtesy www.stockcharts.com
PICTURED 2: The Bank Index ($BKX -0.40%) recently halted its slide above its 200 DMA line. Further deterioration from the financial indices would bode poorly for the broader market outlook.