Paul Ebeling Weekly Outlook

By Paul A. Ebeling, Jnr.,

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What to expect this week and down the line...

This week there is lots of economic data during this 4 day week preceding Easter. This is historically a light trade week and this week should be no exception.

There are a lot of earnings report and we are in a bounce, should be an interesting 4 days action, as the market has held at its 50 day EMA support mark.

That being the case, the market may drift North toward the March and April highs. That would be a good result and when it taps at those highs I expect some profit taking, as the February high will be a test for the S&P 500. It will either show us a Double Top pattern (Bearish) or a reverse Head and Shoulders pattern (Bullish). It will take a bit more time before we know, since many players are away this week and next.

This is a wait to see time and one has to be ready for a break out or a move back down if the earnings are not strong and what the Street wants.

My bias is for a renewal of strength, and a breakout, the trend is up now. The US debt ceiling will be raised a couple of T's, a double dip recession will be avoided, and the US Congress will move on to other issues.

US stocks rose Friday on encouraging economic indicators.
A US government report showed underlying inflation pressures were contained in March, and a survey showed April consumer sentiment rose more than expected.

Are you watching the VIX? The CBOE Volatility Index or VIX fell 5.8% to close at 15.82, its lowest level since July 2007.

On the Week: the DJIA dipped 0.3%, the S&P 500 and the NAS each declined 0.6%.

On the Day: The DJIA rose .DJI closed + 58.78 pts, or 0.46%, at 12,342.00, the S&P 500 .SPX closed + 5.01 pts, or 0.38%, at 1,319.53, and the NAS Composite .IXIC closed + 3.47 pts, or 0.14%, at 2,763.96.

Investors placed their bets on defensive stocks, which usually outperform in times of slowing growth.

Utilities .GSPU and Healthcare .GSPA were the Top-performing sectors in the S&P 500, both + more than 1 % on the day.

Bank of America Corp ( BAC ) reported a steeper-than-expected decline of 37.5% in profit, and named a new CFO. The stock fell 1.6% to 12.92 and was the DJIA bigger percentage loser on the day.

Google Inc ( GOOG ) Thursday reported large rise in Q-1 spending. The Internet company also reported an adjusted profit slightly under expectations. The stock fell 7.1% to 537.38.

Information technology .GSPT was the only S&P sector to fall in Friday afternoon trading.

Charles Schwab Corp ( SCHW ) reported Q-1 earnings that beat expectations by a 0.01. The broker also said clients had reduced the percentage of their cash assets held in Schwab to pre-crisis levels. The stock rose 3.1% to 18.79.

Bond insurer Assured Guaranty Ltd ( AGO ) rose 25.1% to 17.73 on heavy volume after the company announced an agreement with Bank of America on mortgage repurchase claims.

Among other companies in the sector, MBIA Inc ( MBI ) rose 21.6% to 10.86 and PMI Group (PMI) rose 2.8% to 2.24, on Strong volume.

Industrial production for March rose 0.8%, better than the 0.6% increase that had been broadly expected. Capacity utilization came in at 77.4%, as anticipated.

Although stocks were unable to extend their run as the S&P 500 encountered resistance near the 1321-1322 Zone, but their inability to move North was not met with any negative response, as stocks generally drifted during afternoon trade.

Share volume climbed some as a result of options expirations. Still, the 1B shares that exchanged hands on the NYSE today hardly is Strong trade.

Advancing Sectors: Utilities (+1.1%), Health Care (+0.9), Energy (+0.9%), Telecom (+0.7%), Consumer Discretionary (+0.6%), Materials (+0.6%), Consumer Staples (+0.5%), Industrials (+0.4%), Financials (+0.1%)

Declining Sectors: Tech (-0.4%)

Volume and Breadth: About 7.1B/shrs traded on the NYSE AMEX and NAS, below last year's estimated daily average of 8.47b/shrs. Advancers beat decliners on the NYSE by more than 2 to 1, and on the NAS, more than 9 stocks rose for each 5 that fell.

This was a volatile week for May Crude Oil, as it finished + 1.4% to 109.66. Crude Oil started with 2 large sell offs, and rebounded from mid-week forward gaining in three consecutive sessions.

May Nat Gas had a quiet session around the flat line for most of the day, and closing near flat at 4.20 per MMBtu.

Inflation fears sent the precious metals complex higher for a 2nd day running.

Gold rallied for 0.9% to finish at 1486.00 oz, and has extended that move in electronic trade to mark a new all-time high at 1489.10 oz.

Silver rose 2.2% to finish at 42.59 oz, bringing its 2 day rise to over 5.5%, as it rallied to a session, and fresh 31 yr high at 42.87 oz.

The coming week brings quarterly results from a bevy of widely held names. The major banks will report, including Citigroup (C), Goldman Sachs (GS) and Morgan Stanley (MS). More than 10 DJIA components are scheduled to report, including IBM (IBM), Intel (INTC), and General Electric (GE).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing Commodities
Referenced Stocks: AGO , BAC , GOOG , MBI , SCHW

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