To end the week of trading we witnessed the biggest move on all three major indices since November of 2008 as the stock market rallied. The Dow Jones Industrial Average, the Nasdaq, and the S&P 500 all ended the week higher after weeks of declines. The big move was lead by financials up 33 percent for the week, followed by industrials, consumer discretionary materials, and information technology stocks. Citigroup ( C ) CEO Victor Pandit stated that the company is having its best quarter ever since late 2007. JP Morgan Chase (JPM) as well as Bank of America (BAC) followed Citi with similar news and it sparked a huge rally in financials. Citicorp ( C ) ended the week up 72.82 percent, Bank of America (BAC) up 83.44 percent and JP Morgan Chase (JPM) up 40.09 percent.
The Dow Jones Industrial Average moved to the upside after 9 weeks of declines. The Dow fell from a high of 9,088.06 at the begging of 2009 to a low of 6,516.86 earlier this week. I predicted a pullback coming several months ago that the Dow Jones Industrial Average would pullback to downside support at 7,414.00 before heading higher. Since that pullback to the 7,414.00 area, the Dow has tumbled almost 1000 points after breaking downside support. To end the trading week the index ended the week trading at 7,223.98 up 597.04 points or 9.01 percent on 11.61 billion trading volume. The index is below its 5, 10 and 50 week moving averages.
At the Nasdaq there was a move to the upside to end the week after several weeks of free falling price pressure due to heavy selling as well as the current economic conditions. Many investors, professional and non professional alike are saying that this may be the end of the pullbacks in the major indices, but we are still in a BEAR market. The Nasdaq is below its 5, 10, and 50 week moving averages. The index ended the week trading at 1,431.50 up 137.65 points or 10.64 percent on 11.13 billion trading volume.
As for the standard and Poors 500 there was also a move to the upside. The S&P 500 is currently below its major moving averages but in position to move higher if the upside movement of the other major indices continue. Based on the current trend analysis of the S&P 500, the index would need to move above 817.04 in order to continue an uptrend. The S&P ended the week trading at 756.25 up 73.77 points or 10.71 percent on 30.63 billion trading volume. A break above 943.85 will take the index higher in the long-term, but as for now we have a very long way to go.
The Gold Index has been making a pullback due to the rally of the major moving averages. The index moved slightly below its 5 week moving average. The Gold Index moved below its 10 week moving average earlier in the week but ended higher. The index declined. In order for the index to move higher, the index would need to move above $999.60 per ounce. The Gold Index ended the week trading at $930.10 down $12.60 or 1.24 percent. Investors must pay very close attention to the index for a move above its all time high at $1,033 per ounce, one year ago.
As for the Oil Index, the price of crude continued higher for the third consecutive week in a row. A move above $51 will take oil on a huge run up in price going forward. The index is currently above its 5 and 10 week moving average but below its 50 week moving average at $88.46 per barrel. The Oil Index ended the week trading at $47.03 up $1.51 or 3.32 percent. We will see higher prices going forward for a barrel going forward based on a few historical factors. Historically between the months of March through October the price of oil moves higher. The reason for the higher move in the price of oil is due to the summer driving season, hurricanes, as well terrorist attacks on oil pipelines in the Middle East.
By: Marlin Rolle
*** Please have a close look at the charts below ***