On Friday, analysts pondered last week's strange movements of
the stocks and bond markets. And rising yields on Treasurys
throughout the week, while stocks meandered higher, left most
The drift higher took the Dow's blue-chip list to a gain of just
28 points for the week. But the gains on Friday were the biggest of
the week, up 40 points, and were the result of a gain in the
), which jumped 3.4% following a 2-cent hike in its quarterly
The S&P 500 and the Nasdaq Composite, however, took both
indices to new highs. The S&P ran to a fresh two-year high
while Nasdaq soared to a three-year high.
The U.S. trade deficit for October fell more than 13%. A
rise in exports to China, which surged 30% with a slight drop in
imports, were the primary reasons for the favorable news. But
China picked up trade with other nations with both exports and
imports at record levels in November. China's concerns over
inflation have caused it to raise bank requirements for the sixth
time this year and the third in a month.
The preliminary Consumer Sentiment Survey for December posted
its best reading in six months coming in at 74.2 vs. an expected
On Friday, the 10-year benchmark note rose to 3.32%, up from
2.92% on Monday. The dollar rose against both the euro and
yen on Friday with the euro at $1.3229 vs. $1.3243 on Thursday.
The Dow Jones Industrial Average rose 40 points to 11,410, the
S&P 500 gained 7 points, closing at 1,240, and Nasdaq gained
21, closing at 2,638. On the NYSE advancers led decliners by
1.8-to-1 on volume of 975 million shares. Nasdaq traded 455
million shares with advancers ahead by 2.2-to-1.
Crude oil for January delivery fell 58 cents to $87.79 a barrel,
Energy Select Sector SPDR
) rose 27 cents to $65.90. February Gold fell $7.90 to
$1,384.90 an ounce. The
PHLX Gold/Silver Sector Index
) rose $1.24 to $223.45.
What the Markets Are Saying
Worry, worry, worry! Well, perhaps that's one of the
preoccupations of technicians. Last week, I pointed out that our
internal indicators were modestly overbought. Now they are just
plain "overbought." And the sentiment numbers are enough to make
you want to put your trading money in CDs.
This week's Technical Market Insight from S&P's Mark Arbeter
is similarly fearful as he notes, "many bearish divergences with
respect to momentum." And he further opines that "Asian markets
look toppy." He goes on saying, "NYSE new highs put in a lower high
this week, and the 10-day summation of up/down volume on the Nasdaq
has traced out a lower high and a series of lower highs." He
observes that "the CBOE equity-only put/call (p/c) continues to
drop." Concluding, Arbeter says that, "this is not a great time to
be putting money into stocks."
The S&P 500 struggled to finally hit a new two-year high,
and did it on Friday. However, the Dow Industrials are still
mired below a breakout, while the Dow Transportation Average is
romping to new highs almost daily, threatening a non-confirmation
and a serious potential correction.
Meanwhile, in the midst of gloomy predictions, the Nasdaq, the
Russell 1,000 (technology index), and the Russell 2,000 (small-cap
index) are knocking the cover off of the ball. This is very
much the way that 2009 ended with a surge in the "lower quality"
sectors, which ended abruptly in mid-January with a two-week plunge
in the broad market.
If history repeats itself, we have the rest of December to enjoy
the party, so sticking with the groups and indices that are moving
ahead looks like the right approach. The techs and small-caps are
running hard, and the news, with higher consumer confidence
numbers, supports the spike. Let's just hope that the politicians
don't throw a stink bomb into the party room by failing to pass
needed legislation to remove the immediate uncertainty of a stalled
Today's Trading Landscape
To see a list of the companies reporting earnings today,
For a list of this week's economic reports due out,
If you have questions or comments for Sam Collins, please
e-mail him at