Re-cap of the US Stock Market Action for the Week ending 23 April 2010

For the Week: the S&P 500 was up 2.1%, the DJIA rose1.7%, and the NAS gained 2%. It was the 8th straight week of gains for the DJIA and NAS, and the S&P has gained in 7 of the past 8 weeks running.

For the Day: The DJIA closed up 69.99 pts, or 0.63%, to 11,204.28, the S&P 500 gained 8.61 pts, or 0.71% to close at 1,217.28, the leading NAS  tallied up + 11.08 pts, or 0.44%, to end the session at 2,530.15.

Energy shares lifted the broad market after Crude Oil rose 1.7% to above US$85bbl on positive economic data. The S&P energy index rose 2.3%, as Chevron closed up 1.8% at US$82.67/shr.

Merck & Co climbed 5% to US$35.46/shr, making it the top gainer on the DJIA. The drug maker said its costs related to US. Healthcare reform will be a far smaller percentage of total company sales compared with rival drug makers.

That news helped the healthcare sector recover a 2 day selloff on fears over the impact from the new healthcare overhaul law. The S&P healthcare index was up 1.1% on the day, but is down 2.5% for the month.

On Earnings Front: American Express Co rose 2.7% to $48.05/shr after its results beat expectations and the credit card company struck an optimistic tone about future client spending.

Strong earnings have contributed to the market’s gains in recent weeks, with the benchmark S&P 500 up nearly 80% from the 12-year lows of March 9, 2009.

Homebuilders were up 3.3% after data showed sales of newly built single-family homes rose last month to their highest level in 8 months. The homebuilder’s index racked up its biggest weekly advance since July 2009, rising 12.8%, and is on track for its 6 straight month of gains.

New orders for durable manufactured goods ex. transportation posted the largest gain in over 2 yrs.

The NAS’s gains were limited by Qualcomm Inc and Amazon.com which both gave disappointing forecasts earlier last week. Qualcomm fell 2.8% to US$38.25/shr and Amazon was down 4.3% at US$143.63/. Microsoft Corp Inc dipped 1.3% to US$30.99/shr after it reported its Q-1 profit jumped, but the report failed to meet Wall Street’s heightened expectations.

Commodities had a pretty solid session Friday as the CRB Commodity Index put together a 0.7% gain, its 4^th straight advance and put it 1.0% higher for the we

Crude Oil prices were also strong as prices climbed 1.7% to US$85.12 bbl, a closing high on the week.

Gold prices gained 0.9% to settle at US$1153.30 oz., and Silver prices advanced 1.1% to US$18.20oz.

Advancing Sectors: Energy (+2.3%), Materials (+1.3%), Health Care (+1.1%), Utilities (+0.8%), Industrials (+0.7%), Consumer Discretionary (+0.5%), Tech (+0.5%), Financials (+0.4%)

Declining Sectors: Telecom (-0.2%), Consumer Staples (-0.1%)

Volume and Breadth: About 9.28B/shrs traded on the NYSE, the AMEX and NAS, below last year’s estimated daily average of 9.65B/shrs. Advancers outnumbered decliners on the NYSE by 2,161 to 869, and on the NAS, advancers beat decliners 1,702 to 991.

Market Indexes Technical Analysis

Major World Markets

Gold and Crude Oil Focus Report (Weekend Up-date) w/Technical Outlooks

Gold dipped, halting a 2day rally, as the Euro sank to a new 11 month low against the USD. However, the recovery after sliding to as low as 1132 signaled the precious Yellow metal’s underlying strength.

In fact, while the market has only focused on Greece’s deficit issue, such problem has also rooted in other countries including the US, Japan and the UK. If worries intensify and spread to these countries, I do believe Gold will likely benefit.

Crude Oil initially slumped as global stock market sank on the revision of Greece’s debt deficits. Together with disappointing inventory report released last Wednesday, the front-month WTI contract sank to as low as 81.73. However, buying interests came in at that level as the price reversed, and Crude Oil ended the day flat at 83.7. Strong rebound in equities and attack of Iraqi Oil pipeline also supported Crude Oil.

Specifically to the Crude Oil market, damage of an oil pipeline from Iraq to Turkey disrupted supply which will take around 3 days to resume.

The Overall Technicals for Gold

Gold’s recovery from 1124.3 continued last week, and reached 1157.9. A further rise will likely come initially this week. But, since the recovery from 1124.3 is looking corrective in nature, I expect the upside to be limited by 1170.7 resistance level, and bring one more dip to continue the whole consolidation. A move below 1135.2, the minor support, will turn the intra-day bias back to the Southside for 61.8% retracement if 1084.8 to 1170.7 at 1117.6 and below

The Big Picture: the lack of impulsive structure in the rise from 1044.5 suggests that it is the 2nd leg of the whole consolidation pattern that started at 1227.5. Right now, there is no confirmation that the rise from 1044.5 is completed, and another rise might come on. However, even in that case, strong resistance should be seen above 100% projection of 1044.5 to 1145.8 from 1084.8 at 1186 to complete the rise and bring the another fall to retest 1044.5 before consolidation from 1227.5 completes.

Meanwhile, a break of 1084.8, a Key support level, will indicate that the 3rd falling leg has likely started, and will then target a new low below 1044 before completing the consolidations from 1227.5.

The Long Term Picture: the rise from 681 is treated as resumption of the long term up-trend from 1999 low of 253 after an interim consolidation from 1033.9 has completed in form of an expanding triangle. The next long term target is 100% projection of 253 to 1033.9 from 681 at 1462 level.

So, I will hold the Bullish POV as long as 931.3 structural support holds.

The Overall Technicals on Crude Oil

Crude Oil’s rebound from 80.53 resumed towards the end of the session on Friday after a initial setback and closed strong at 85.12.

A further rise is now expected to retest the 87.09 high; a sustained break there is needed to confirm the rally’s resumption. Otherwise, another fall will happen before the consolidation from 87.09 concludes.

On the Downside: a break below 81.73, the minor support, will turn the intra-day bias back to the Southside for a 38.2% retracement of 69.50 to 87.09 at 80.37 or possibly further to 61.8% retracement at 76.22.

The Big Picture: the medium term rise from 33.20 is viewed as a correction to the overall correction that started in Y 2008 at 147.27. My preferred POV is that the rise from 33.2 is in form of a 3 wave structure (73.23, 65.05) and should be near to completion.

Strong resistance is expected around 90 a Key level, which coincide with 50% retracement of 147.27 to 33.2 at 90.24 and 61.8% projection of 33.2 to 73.23 from 65.05 at 89.79, and bring a reversal.

Then, even though another rally cannot be ruled out in here, the upside potential will likely be limited.

On the Downside: the break of 69.50 support will break the series of higher low pattern from 33.2 and will be an important indication that the trend has reversed.

Should that be the case, I will turn Bearish on Crude Oil and expect the down-trend to target a new low below 33.2.

The Long Term Picture: there is no change in the POV that the fall from 147.27 is part of the correction to the 5 wave sequence from 98 low of 10.65. While the rebound from 33.2 is strong, and can continue, there is no solid evidence that suggest fall 147.27 is completed and I prefer the case that rebound from 33.2 is a corrective rise only.

Again, having said that, strong resistance should be seen between 76.77/90.24 fibo resistance zone and bring reversal for another low below 33.2 before completing the whole correction from 147.27. Stay tuned…Paul A. Ebeling, Jnr. www.livetradingnews.com

Some Stocks to Watch this Week

American Express Company (AXP), Caterpillar, Inc. (CAT), The Home Depot Inc. (HD), KB Homes (KBH), and Xerox Corp. (XRX).

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Posted by Shayne Heffernan on Apr 26th, 2010and filed underCommodities, Economy, Equities, Forex, Limelight, Markets, News & Events, Stocks.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site