As the week blew past the Dow Jones Industrial Average, The Nasdaq and The S&P 500 all ended the week on the upside. The market announcement by the FED stating that it will pump one trillion dollars into the economy had a strong impact taking the markets higher. The markets movers were lead by utilities, followed by materials, telecom services, energy and consumer discretionary stocks. One out of every ten industry groups moved lower. The U.S. dollar also tumbled to end the week with it worst week of losses since 1985 against a basket of major currency pairs.
Many investors are saying that the market has hit a bottom as of the pullback to the low of 6,469.95. As for now, there has been no confirmation that the market has bottomed. We are still in a bear market. I predict that this market will pullback further to test the lows once more before heading higher. Historically major market declines take place between the months of March to October as energy price turn to the upside moving higher. All three major indices finished the week with a shooting star candlestick price pattern. A shooting star forms when there are more sellers in a particular stock/indices. This is a warning that there might be a reversal to come as the stock/indices ends the day or week very close to its previous closing price.
The Dow Jones Industrial Average ended the week higher for the second week in a row lead by stocks in the utilities sector. Seventeen stocks were up to end the week as thirteen declined. The Dow ended the week above its five week moving average but below its ten and fifty week moving average. The index closed at 7,278.38 up +54.40 or 0.75 percent on 13.57 billion trading volume.
The Nasdaq closed to end the week as the best performer of all three major indices. The uptick in the Nasdaq was due to a move by the financial sector. The Nasdaq ended the week trading at 1,457.27 up +25.77 or 1.80 percent on 11.74 billion trading volume. The Nasdaq is poised to make a move to the upside but will need to move above upside resistance at 1,665.63. The index traded in a sideways consolidation for 19 weeks straight before falling multi year lows at 1,265.52.
At the Standard and Poors 500 there was also a move to the upside for the second week in a row. The index is above its five week moving average but below its ten and fifty week moving averages. The (MACD) moving average convergence divergence is also starting to cross to the upside as heavier than average volume goes into the price of the index. As for now the S&P will have a long way to go to get back to upside resistance at 1,007.51. The index ended the week trading at 768.54 up +11.99 or 1.58 percent on 34 billion trading volume.
A look at the gold index shows that the price of gold is currently starting to move higher as the U.S. dollar falls. The gold index has been on a tear for nineteen weeks before moving in a sideways consolidation for the past three weeks. The gold index is currently above its five week moving average but below its ten week moving average. If the price of gold moves above $952.54 we will see a continuation in the price of gold to the upside. If the price falls below $929.04 per ounce we will see the index move much lower. Many analysts predict that the price of gold may break above March 2007 price highs ending the year above 1100 per troy ounce. The gold index ended the week trading at 952.34 up $22.24 or 2.39 percent.
Over in the oil markets there has been a price increase in the price of oil for the past few weeks. As for now the index is currently trading within a cup with a handle price pattern. Lower rates by the FED may have an impact on the price of oil going forward in order for the index to move higher. The index has been moving to the upside for four consecutive weeks. Oil has been on a tear this week, making double digit gains to end this past week on the upside. Heating oil ended the week up 2.08 percent, followed by gasoline futures up 1.36 percent and natural gas up 1.56 percent. Demand for oil is weak, but there is a possibility that oil may move higher in the near term. Upside resistance for the oil index is at $55.98. The price of oil has not been above $50 since November of 2008. The oil index ended the week trading at $52.07 up $5.04 or 10.72 percent above its five and ten week moving averages. Investors must keep an eye on the price of oil going forward as the summer driving season approaches.
By: Marlin Rolle
*** Please have a close look at the charts below ***