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Friday ended with the Dow Jones Industrial Average at a two-and-a-half-year high, prompted by the resignation of Egypt’s president and the possible end to the crisis that has captured the world’s attention for over two weeks. Financial stocks, and especially mortgage insurers, had been powerful on a U.S. government proposal to reduce the size of the Federal Housing Administration, which competes directly with the private mortgage industry.

Daily Stock Marketplace News

Dow: +44 points at 12,273
S&P 500: +7 points at 1,329
Nasdaq: +19 points at 2,809

Volume and Breadth

NYSE: 999 million shares traded; advancers ahead 2.9-to-1
Nasdaq: 532 million shares traded; advancers ahead 2.2-to-1

Futures and Related ETFs

March Crude Oil: -$1.15 at $85.58 per barrel; Energy Select Sector SPDR (NYSE: XLE) -93 cents at $73.37
April Gold: -$2.10 at $1,360.40 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -3.51 points at 206.29

What the Markets Are Saying

Mid-week there was concern by several analysts that the initial support of the S&P 500, which was Monday’s low, was in danger of being broken. The low that they had been fixed on was 1,312. But the concern proved short-lived. The S&P 500 fell to just under 1,312 on Thursday, before reversing and running to new highs on Friday.

Thus far, the major indices have survived every chart test in fine style. For the Dow, it is 12,150, and for the Nasdaq, it is 2,766. The 20-day moving average for each index is also a near-term support number to watch:

Dow: 12,011S&P 500: 1,301Nasdaq: 2,748.

I can understand the concern of many technicians about the rapid advance of stocks despite the overbought readings of the internal and sentiment indicators. And I’ve expressed those concerns in the Everyday Marketplace Outlook. But rather than focus on such an immediate number as a weekly low, I would focus on the trendline that connects the late September low of S&P 1,040 to the correction low of November at 1,174 since it is a significant near-term support line. That line, which is now at 1,290, rests between the 20- and 50-day moving averages, and a penetration of it would no doubt put pressure on the 50-day moving average and, thus, the intermediate trend of the marketplace.?

But how about near-term targets?

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There was so little news yesterday that buyers and sellers had been at a stand-off, and so stocks traded in a narrow range with volume declining to just over 800 million shares on the NYSE. Energy stocks had been the best performers in reaction to what seems a more settled political climate in the Middle East. The euro fell to a three-week low versus the U.S. dollar on concerns over the health of a German bank.?

Daily Stock Marketplace News

Dow: -5 points at 12,268
S&P 500: +3 points at 1,332
Nasdaq: +8 points at 2,817

Volume and Breadth

NYSE: 816 million shares; advancers ahead 1.4-to-1
Nasdaq: 514 million shares; advancers ahead 1.2-to-1

Futures and Related ETFs

March Crude Oil: -74 cents at $84.84 per barrel; Energy Select Sector SPDR (NYSE: XLE) +$1.63 at $75.74
April Gold: +$4.70 at $1,364.60 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +4.39 points at 208.12

What the Markets Are Saying

Even with a major political crisis in the most economically sensitive part of the world, stocks continued to plow ahead as if all was right with the world. We could call it buyers’ blinders since the uncertainties are almost too numerous to count. And even the most ardent optimist, with a brief background in investing, knows that at some point something will trigger a sell-off. Nonetheless, until the signal is given, holders of stocks are better off, well, just holding stocks.

In the meantime, we’ve got a dead boring advance going, which is great for the bulls. But I must confess that in a situation where the charts of the major indices show a line of advance at 45-degree angle with stocks running higher at a measured pace day after day, I find it difficult to come up with something new to say every day. Last night, I poked around the Net to find a seed of truth that might germinate into an idea for you this morning. A source that I often go to when in need of a refreshing idea is my good friend Bryan Perry’s double-digit income investing newsletter Cash Machine.

Bryan is really articulate and a great source of money-making ideas and a terrific fishing buddy, as well. I pulled up his latest issue and found Bryan quoting my Feb. 8 Everyday Marketplace Outlook discussion on inflation, and I am truly honored. Bryan has been providing the tools needed to manage a high-yield asset portfolio to his clients for years. As he puts it, Learning skills of how I manage high-yield assets through every type of marketplace environment is a tool box of investment knowledge you can use for the rest of your life.

He further points out that, Energy, industrials and technology are powering higher, enticing more and more capital inflows into equities as more evidence emerges that the U.S. economy is finding its legs. And goes on to say, Having structured our portfolios months ago to be sensitive to what is now unfolding in the form of higher commodity prices and higher interest rates puts us in a position to not just fight inflation, but profit from it.??

Bryan and I have not talked about the oil tanker companies, but last week I referred to the purchase of oil tanker stocks as a hedge against a possible slowdown in crude oil and refined shipments, and recommended Teekay Corp. (NYSE: TK) as the Trade of the Day. I note that he has TK and Ship Finance International Limited (NYSE: SFL) on his buy list both have big dividend yields and haven’t yet had a big move because of recent financing deals. In my opinion, they are both ready to head north.

Take a look at our Trade of the Day for another of Bryan’s favorites.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

The big news of the day was the merger of NYSE Euronext and Deutsche Borse AG, with the German exchange holding controlling interest of 60%. The deal follows other international exchange combinations: Toronto’s TMX Group and London Stock Exchange Group, and Singapore Exchange and Australian operator ASX Ltd.

In other news the Dow fell under the impact of a slide by energy stocks Exxon Mobil (NYSE: XOM) and Chevron Corp. (NYSE: CVX), and investors’ fears of creeping inflation.

Daily Stock Marketplace News

Dow: -42 points at 12,227
S&P 500: -4 points at 1,328
Nasdaq: -13 points at 2,804

Volume and Breadth

NYSE: 929 million shares traded; decliners ahead 1.6-to-1
Nasdaq: 543 million shares traded; decliners ahead 1.6-to-1

Futures and Related ETFs

March Crude Oil: -49 cents at $84.32 per barrel; Energy Select Sector SPDR (NYSE: XLE) -79 cents at $74.95
April Gold: +$9 at $1,376.30 an ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +1.67 points at 209.79

What the Markets Are Saying

Low-volume trading limited to a narrow range has become the standard lately. And yesterday was more of the same. Stocks opened lower and spent most of the day trying to make up for the early losses, but in the end, succumbed to mild selling.?

But there was no technical damage as stocks failed to pick up downside volume, and the trading looked more like a day in August, with most traders at the beach, than a cold day in February.

Sell in May?- is months away, but a correction of the current trend should be expected due to the steep slope of the advance line on the charts of the leading exchanges. Technicians get concerned when the major indices drive above their 200-day moving averages by more than 10%, and the S&P 500 is now over 14% above the key moving average.

But despite the concern triggered by technically overbought markets, there is no reason to sell unless other technical indicators tell us that a trend change is occurring. I’ve had several e-mails asking about the terms overbought and oversold. These terms are used by technicians who study indicators that have historically predicted moves either up or down in the stock marketplace. One of those leading indicators is the Moving Average Convergence/Divergence (MACD), often called just the MacD, designed by the famous marketplace technician Gerald Appel.?

Although the term sounds complicated, it really isn’t. I use the traditional fast-moving exponential average of 12 bars (days) and slow exponential moving average of 28. All this indicator is saying is that when a fast-moving average moves through a slower moving average, it has significance. When the fast moves up through the slow it gives a buy signal, and when the fast moves down through the slow, it gives a sell signal.?

Below is a current illustration of MacD’s record to correctly predict short-term trading buy and sell signals for the Dow Jones Industrial Average over a seven-month period.

The red line is the fast average; the blue is the slow. The light blue line chart in the middle is the difference between the slow and fast indicators. When the differences are wide and the line closes quickly, as in early December, the crossover’s predictive value is considered to have greater significance.?

Note that the August sell at Dow 10,379 was followed by a buy signal in early September at 10,320 for a gain of 59 points. The sell in November at 11,283 netted a gain of 963 points, and the buy at 11,362 in December has a current gain of 864 Dow points for a total gain of 1,886 points.

It appears that we could see a minor crossover within the next several days. Even so, the difference between the moving averages (light blue line chart) is not great, so if it occurs, it is likely to have minor significance.

Since it would be irresponsible to trust a single indicator, regardless of its reputation, I depend on several internal indictors, plus several sentiment indicators. I’ll cover each of these in the coming weeks.

For my top stock pick, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

Yesterday was Double Day as the S&P 500 finally achieved twice the level of its intraday low of 666.79 on March 6, 2009. The only interruption to yesterday’s broad advance occurred when Israel’s foreign minister warned Iran that if they sent two warships through the Suez Canal, Israel would consider it a provocation.

The marketplace dipped, but then recovered on the Fed’s new optimism as they raised their growth outlook for 2011 and pledged to continue with its quantitative easing effort to support the economy. The notes of the late January meeting show a different tone in that some of the governors raised the possibility of scaling back the bond purchases in order to avoid future inflation.

Daily Stock Marketplace News

Dow: +62 points at 12,288
S&P 500: +8 points at 1,336
Nasdaq: +21 points at 2,826

Volume and Breadth

NYSE: 928 million shares traded; advancers ahead 3-to-1
Nasdaq: 585 million shares traded; advancers ahead 1.9-to-1

Futures and Related ETFs

March Crude Oil: +67 cents at $84.99 per barrel; Energy Select Sector SPDR (NYSE: XLE) +$1 at $75.95
April Gold: +$6.30 at $1,380.40 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +$1.61 at $211.40

What the Markets Are Saying

Monday’s pause gave way to a broad advance. Even though the volume is still lower than normal, breadth was on the side of the bulls, with a 3-to-1 advantage on the NYSE. And the Nasdaq blew into new high ground with barely any resistance.

And so the S&P 500 has doubled from its March 2009 low on a day that was as powerful as any this year. Though the gain for the index was just 0.63%, its ability to spring back from a new crisis shows the tenacity of buyers who will jump on any weakness as a buying opportunity. You just can’t ask for better than that.

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Another new two-and-a-half-year high was sparked by a better-than-expected Philly Fed Survey for February that showed a greater increase in general business activity. Despite a higher CPI than expected (an early inflation warning) and slightly more initial jobless claims, an increase in business in the mid-Atlantic states brought in buyers of stocks.

Daily Stock Marketplace News

Dow: +30 points at 12,318
S&P 500: +4 points at 1,340
Nasdaq: +6 points at 2,832

Volume and Breadth

NYSE: 881 million shares traded; advancers ahead 1.9-to-1
Nasdaq: 512 million shares traded; advancers ahead 1.5-to-1

Futures and Related ETFs

March Crude Oil: +$1.47 at $86.40 per barrel; Energy Select Sector SPDR (NYSE: XLE) +75 cents at $76.70
April Gold: +$10 at $1,385.10 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +1.16 points at 212.56

What the Markets Are Saying

For two days we’ve been studying the internal indicator called the Moving Average Convergence/Divergence (MACD), because this is the indicator that many technicians find most significant.

Today, we’ll do our normal review of the internal and sentiment indicators on which I rely. And next week, I’ll provide a detailed study of another important technical indicator.

The internal indicators, chiefly MACD, stochastic, Relative Strength Index (RSI) and momentum are clearly overbought. But like the MACD, none has rendered a sell signal.?

I use charting software that provides over 100 indicators, but I’ve selected only the above to show independently on my charts. Over decades, I’ve studied scores of programs, but found this method to be the most reliable.

A nice, but not controlling, feature of the software enables me to ask the program to tell me the significance of a given indicator, under current marketplace conditions. This is what the program says about the momentum indicator for the broad-based NYSE Composite Index: Conventional Interpretation: Momentum (208.36) is above zero, indicating an Overbought Marketplace. Additional Analysis: The long-term trend, based on a 45-bar moving average, is UP. The short-term trend, based on a 9-bar moving average, is UP. Momentum is indicating an overbought marketplace. Nevertheless the marketplace may continue to become more overbought. Given the 45-bar new high here this is even likely. Look for some evidenced weakness before getting too bearish here.

I don’t always agree with the computer, but in the current marketplace condition, I think that its pre-programmed analysis is dead right.

Now let’s consider the sentiment numbers, and for that I go to the American Association of Individual Investors (AAII) and Investors Intelligence (II).?

AAII produces lots of information to help investors, and I suggest that if you are really serious about investing, you should spring for the 49 bucks a year for their Enhanced Membership, which is the most comprehensive service you’ll ever find for the money. You’ll get Model Portfolios of stocks, ETFs and mutual funds, a top mutual-fund guide, useful tax tips, plus 60 online stock screens. And on top of that, a subscription to Computerized Investing Journal with reviews of charting programs, investment analysis, and on and on.

Each week, AAII e-mails me the results of their Sentiment Survey, which is the most widely accepted sentiment indicator by technicians. It is a contra indicator when it is bullish, we conclude that is telling us that stocks are overbought and, thus, bearish for the marketplace. This week, the survey reported a 2.8% decline in bullish sentiment to 46.6%. This is the third time in four weeks that optimism has been below 50%. But bullish sentiment that stocks will rise over the next six months was above the historical average of 39% for the 28th consecutive week. Bearish sentiment fell 1.3% to 25.6%.

Conclusion: With bullish sentiment declining, the marketplace will most likely continue to rise.

The II survey is also a contra indicator. From their latest readings of advisory letters they conclude, We failed to note any new increase in advisor optimism. Instead we noted more and more editors expressing that we are ‘overdue’ for a correction. The bulls contracted by just over 1% to 52.2% from 53.4% the week before.

Conclusion: Like the AAII survey, bullish sentiment is declining and, thus, the marketplace will most likely continue to rise.?

Overall conclusion: The unusually tame (Michael Ashbaugh’s words) condition of the marketplace, despite upheavals in Europe, Asia and now the oil-rich countries of the Middle East, has resulted from steady Fed (QE2) buying that is designed to keep money flowing into the markets, thus thwarting the reasonable expectation of regular marketplace corrections. When the Fed’s money stops, we will most likely experience a quite sharp sell-off. The Fed has pledged to keep the flow going until early fall, and the bull will most likely continue to run for up to another six months with only minor setbacks.?

It’s never this easy, and so be long, be wary, and keep your stops tight.

For a comeback stock, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

Despite more chaos in the Middle East and tightening by China’s central bank, on Friday, stocks made new two-and-a-half year highs for the third consecutive week. And even with more oil-rich nations forcing changes in their governments, which could reduce the flow of oil from the Middle East, the marketplace took the news in stride and continued to add to its gains.

Daily Stock Marketplace News

Dow: +73 points at 12,391.25
S&P 500: +3 points at 1,343
Nasdaq: +2 points at 2,834

Futures and Related ETFs

March Crude Oil: +78 cents at $87.14 per barrel; Energy Select Sector SPDR (NYSE: XLE) +32 cents at 77.02
April Gold: +60 cents at $1,385.70 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -11 cents at 212.45

What the Markets Are Saying

So far, U.S. markets have all but ignored the rush to overthrow the governments of Egypt, Bahrain, Yemen and Tunisia. Not one of these countries produces enough oil to have significant impact on the energy requirements of North America and Europe. But over the weekend, Libya, which produces 10% of Middle East oil, exploded in crisis and Syria sent two warships through the Suez Canal.

On Monday, oil futures rose almost 4% and European stocks fell sharply. So far, U.S. stocks have been immune to the upheaval. But with some of the prime oil-producing states under siege, and the charts showing spikes, it is time once again to review our markets to see where the major support zones lie.

For the Dow, the first line of support is at the psychological number of 12,200, and for the S&P 500, there is a similar number at 1,300. But there are other more subtle areas of support that might be of special interest to traders. For the Dow, it is the 20-day moving average at 12,126, which also happens to be extremely close to the intermediate bullish support line, and the 50-day moving average at 11,831. The S&P 500 has a similar pattern with its 20-day moving average at 1,313 and the 50-day at 1,284. The Nasdaq’s first support is at 2,800 with the 20-day moving average at 2,771, and the 50-day at 2,716.

I’ve noticed that the U.S. dollar and gold have reverted to the normal reverse correlation. In late January and early February, it looked for a time that gold and the buck would head in the same direction, and that direction was down. But last week, they diverged with the dollar heading down and gold up. Now the dollar, as measured by the PowerShares DB US Dollar Index Bullish Fund (NYSE: UUP), is having problems making real headway and is stalled at the resistance at around $22.60. Gold, nonetheless, broke above its 50-day moving average and is plodding into the triple-top resistance that begins at just over $136 for the SPDR Gold Shares (NYSE: GLD).?

What I find curious is that in a clear crisis where the world’s oil supply may be at risk, neither gold nor the U.S. dollar is operating in a normal way as the objects of a flight to safety. Instead, the stock marketplace heads higher.?

Conclusion: The Fed is still buying and those who follow their direction are ignoring the normal defensive reactions that would normally drive gold, the dollar, and other defensive stocks and commodities higher. The lone exception to this thesis is silver, and you could also throw in the other industrial metals, as well they are running on a new world inflationary cycle that for now is focused on usable materials and consumable commodities.?

For one stock that traders should take profits in, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

On Tuesday, the stock marketplace had its worst day of the year as riots in Libya resulted in a threat to cut the supply of Middle East oil at a time when the economic impact could be severe. Even though consumer confidence hit a three-year high, it had little impact on the market’s direction, and the major indices closed just slightly higher than their intraday lows.

Daily Stock Marketplace News

Dow: -178 points at 12,213
S&P 500: -28 points at 1,315
Nasdaq: -78 points at 2,756

Volume and Breadth

NYSE: 1.3 billion shares traded; decliners ahead 5.8-to-1
Nasdaq: 646 million shares traded; decliners ahead 6-to-1

Futures and Related ETFs

March Crude Oil: +$7.62 at $93.82 per barrel; Energy Select Sector SPDR (NYSE: XLE) -75 cents at $76.27
April Gold: +$12.50 at $1,401.10 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -3.2 points at 109.25

What the Markets Are Saying

In a way, despite a big triple-digit day of selling, it was a relief to see investors react in a more logical manner following a period when nothing seemed to stand in the way of a consistent stream of new highs.?

As noted, the marketplace has been driven higher by QE2. Nevertheless, history tells us that not even the Fed can control markets indefinitely. Eventually, a secondary driving force, like the Fed, runs out of money and the real trend asserts itself. Last week was especially maddening as buyers drove stocks higher for the third consecutive week while ignoring major uprisings in countries that have been friendly to America. But it took just a weekend of rioting in a country that produces about 10% of the oil shipments from the area to send stocks off the cliff.

Yesterday may have shaken some stock owners from their lethargy, and so we will probably get more selling today, especially if Libya cuts oil shipments. But even yesterday’s selling, with the exception of the Nasdaq, has failed to signal that a major reversal is about to occur. From a technical standpoint, the other indices (S&P and Dow) stopped short of issuing a signal by closing just above the first area of support the 20-day moving average lines.?

However, the alarm has been sounded. Volume expanded rapidly and the Nasdaq, which has led stocks higher for months, closed below its 20-day moving average. Its next support line is the 50-day moving average, which has moved up to 2,719, coinciding with a support line that connects to a double-top back in 2007. In other words, this line is important since a close below it would target 2,670 and result a change in the intermediate trend of the index.

Contractions following a big run can be nasty affairs that wipe out gains in days that took weeks to achieve. Therefore, it is necessary to go to a defensive strategy until the crisis releases its grip on the markets. And there will be some excellent opportunities, especially in the domestic energy area, of which traders and investors should take advantage. (For one, see the Trade of the Day.)

But, until further notice, most other investments should be put on hold. I have a notion that we will see a great opportunity to buy stocks at much lower prices, especially if the price of crude oil pushes gasoline to over $4 per gallon.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.

On Wednesday, the Dow Jones Industrial Average registered triple-digit losses for the second straight day. The impact of crude oil hitting $100 a barrel, continued rioting in Libya and the Middle East, and a sharp drop in revenues by Hewlett-Packard Company (NYSE: HPQ) sent stocks reeling.?

Daily Stock Marketplace News

Dow: -106 points at 12,106
S&P 500: -8 points at 1,307
Nasdaq: -33 points at 2,723

Volume and Breadth

NYSE: 1.3 billion shares traded; decliners ahead 1.7-to-1
Nasdaq: 688 million shares traded; decliners ahead 3.2-to-1

Futures and Related ETFs

April Crude Oil: +$2.68 at $98.10 per barrel; Energy Select Sector SPDR (NYSE: XLE) +$1.55 at $77.82
April Gold: +$12.90 at $1,414 an ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +4.05 points at 213.3

What the Markets Are Saying

On Tuesday, the major indices, with the exception of the Nasdaq, held at their first lines of support, while their internal indicators Moving Average Convergence/Divergence (MACD), stochastic, momentum failed to issue sell signals. Only the Nasdaq raised the yellow flag as it tumbled through its 20-day moving average but fell short of penetrating its 50-day moving average. The Nasdaq’s down volume was 20-to-1 a nasty omen.

We closed out the day warning that the alarm has been sounded, since the Nasdaq led the way up, it is likely that it would be the first index to break down. The Nasdaq’s MACD indicator flashed a bearish signal and momentum fell to negative.?

Yesterday, the Nasdaq, along with the other indices, fell once again. This time the decline was not so severe with the downside volume on the Nasdaq at 7-to-1 versus 2-to-1 on the Dow. But the two-day combined percentage drop was almost 1.7-to-1 against Nasdaq at 3.94% versus the Dow’s decline of 2.33%. The Nasdaq’s MACD bearish signal on Tuesday was followed on Wednesday by a sharp decline in Relative Strength Index (RSI) and a bearish signal from the slow stochastic.

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Following two days of deep losses, stocks closed mixed yesterday with the Nasdaq rebounding from a technical support line. But the focus was still on Libya, and with no end in sight in the political crisis there, investors decided to wait it out. Initial jobless claims fell more than expected and durable goods rose more than expected. And sales of new homes hit the rocks last month, reversing the prior month’s gains.

Daily Stock Marketplace News

Dow: -37 points at 12,069
S&P 500: -1 point at 1,306
Nasdaq: +15 points at 2,738

Volume and Breadth

NYSE: 1.2 billion shares traded; decliners ahead 1.7-to-1
Nasdaq: 612 million shares traded; decliners ahead 3.2-to-1

Futures and Related ETFs

April Crude Oil: -82 cents at $97.28 per barrel; Energy Select Sector SPDR (NYSE: XLE) -$1.10 at $76.72
April Gold: +$1.80 at $1,415.80 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -4.87 points at 208.43

What the Markets Are Saying

Stocks rebounded after two days of heavy selling, but volume declined and two of the three major indices (Dow Industrials and S&P 500) closed with losses. The Nasdaq managed to eke out a gain, but not before an intraday penetration of its 50-day moving average for the second day in a row.

The Nasdaq still appears to be the leading index as trading throughout yesterday in the Dow and the S&P 500 swung back and forth with it. I noted in yesterday’s Every day Marketplace Outlook that following two nasty rounds of selling we might see a rebound. But all that we got yesterday was a half-hearted rally from the Nasdaq and more selling in the senior indices. The Nasdaq, like the other two major averages, has penetrated its near-term support line, and none of the three has yet managed to close above it.?

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On Friday, stocks closed higher after three days of losses. But the week closed with a loss of 1.7% for the S&P 500 the largest weekly loss of the year. Libya, which produces around 2% of the world’s crude oil, is in political chaos, and that sent stocks lower until Saudi Arabia stepped in on Friday, saying that they could increase production and make up for any shortfalls.

Also on Friday, The Boeing Company (NYSE: BA) won a major contract, and the Consumer Sentiment Index rose to the highest level in three years.

Daily Stock Marketplace News

Dow: +62 points at 12,130
S&P 500: +14 points at 1,320
Nasdaq: +43 points at 2,781

Volume and Breadth

NYSE: 953 million shares traded; advancers ahead 4.2-to-1
Nasdaq: 525 million shares traded; advancers ahead 4-to-1

For the Week:

Dow: -2.1%
S&P 500: -1.7%
Nasdaq: -1.9%

Futures and Related ETFs

April Crude Oil: +60 cents at $97.88 per barrel; Energy Select Sector SPDR (NYSE: XLE) +$1.22 at $77.94
April Gold: -$6.60 at $1,410 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) +3.78 points at 212.21

What the Markets Are Saying

The first three days of last week looked like the opening of a horror movie as street scenes of rioting crowds and burning vehicles flashed across TV screens from several Middle Eastern countries. The major indices fell sharply in direct relation to threats to oil supplies, and stocks plunged through crucial technical support lines.?

But, by Friday, the theme turned more positive and ended like the typical old-fashioned western with the cavalry (Saudi Arabia) coming to the rescue with offers to stabilize the oil supply. And even though the buying lacked volume, the breadth was good and stocks managed to close out the week with a rally.

This is the first pullback for the markets since November, and the move down occurred in just three shocking days. During that time, the two most important indices on which we focused had been the S&P 500 and Nasdaq. The S&P 500 because of its broad makeup and the Nasdaq as the former bull marketplace leader. From intraday high to intraday low, the S&P 500 had a decline of 3.7%, and the Nasdaq fell 4.7%. Normal bull marketplace corrections usually fall into the 5% to 8% range and take a number of weeks to wind out.?

The three major indices violated their near-term support and their 20-day moving averages. But two of the three S&P 500 and Nasdaq reversed back up and closed slightly above their respective 20-day averages. And the Nasdaq rallied above its 20- and 50-day moving averages and a resistance line drawn from its January highs at 2,765, successfully neutralizing its decline.?

But two of the major indices must close above some key resistance numbers before their violent breakdowns can be considered reversed: The Dow must close above the resistance from Friday’s close at 12,130 to 12,221 (20-day at 12,174), and the S&P 500 must close over 1,325.

The Nasdaq’s neutral position is encouraging, but last week’s two high-volume down days, a 20-to-1 and 10-to-1 down, are disturbing. The CBOE Volatility Index (VIX), which jumped from 15.54 to 23.22 in just two days, is troubling, as is its powerful Moving Average Convergence/Divergence (MACD) sell signal on Tuesday. And our momentum indicator has not yet turned positive on any of the major indices.

Conclusion: The leading index, the Nasdaq, has successfully neutralized its near-term decline, but the Dow and the S&P 500 have yet to turn the near-term tide back up. Thus, the red flag is still flying for the short-term trend. Nonetheless, the intermediate- and long-term trends are still in bull markets.

For an oil stock to buy now, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.