They are calling it the worst weekly performance this year! For the week the Dow Jones Industrial Average (chart) fell a modest 1.15%, the Nasdaq (chart) -0.41%, the S&P 500 (chart) -0.50% and the Russell 2000 (chart) basically closed the week unchanged. If this was the sharpest decline of the key indicies in 2012, I think the bulls will take it and the bears must be scratching their heads.

Coming into the new year, I don’t think anyone would of projected that the worst declines of the year for the major indexes would be a paltry 1% or so in a given week. Especially when you considered the enormous volatility that occurred in 2011. The week ahead may be back to the status quo for stocks as we will be in the final week of the first quarter of the trading year which should initiate the proverbial window dressing methods implemented by certain fund managers. Window dressing is a strategy used by institutional investors and mutual fund managers as the end of the quarter or year approaches to augment the performance of their respective funds or portfolios. In most instances these managers may sell the stocks in their portfolio that are at a loss and purchase high beta momentum stocks to improve the overall appearance and return on their portfolios. We will see if this strategy rings true by weeks end. Good luck to all.

Have a great weekend 🙂

~George

Stocks continue to lift this week as the nations top banks passed their respective stress tests and strong economic data continues to stream in. For the first time in years the S&P 500 (chart) closes above the 1400 level. Also, the Nasdaq (chart) on Tuesday closed over 3000,  a level not seen in over a decade. The Dow Jones Industrial Average (chart) continues its march north of 13,000 and the small-cap bellwether Russell 2000 (chart) closed in the 830 area. This 830 zone for the Russell has provided significant resistance as of late, so we will see if the this index can breakout like the other key indices have.

There is one other average I am watching to see if this incessant market run can continue, and that is the Dow Jones Transportation Average (chart). Market pundits have argued that during this bull market the transports have lagged and have not really participated in the rally. In fact, this is what the short side has relied on in part to support their short thesis. Historically speaking, when equities are rallying and the transports are not, this is an indication of an imminent reversal for equities. Well in today’s session the Dow Jones Transportation Average (chart) had one of its strongest days of the year. I am looking now for a a meaningful break above the 5400 level in the transports. If this occurs and if the transports can remain above 5400, this could be yet another powerful indicator that supports this bull market.

Good luck to all.

~George

The old wall street adage “The trend is your friend” is certainly ringing true in the stock market so far this year and now the job market apparently is beginning its own trend. February’s jobs report announced yesterday was once again better than expected. Although the headline unemployment rate remained at 8.3%, the economy welcomed in 227,000 new jobs. This is the third month in a row that payrolls have increased by over 200,000.

Once again traders and investors are embracing the signs of a stronger economy which is buoying the stock market. Just as the markets appeared to be headed for their first meaningful pullback of the year earlier this week, the bulls stepped into stocks on Wednesday providing a floor and sending equities higher the rest of the week. Most of the key indices were up on the week with the Dow Jones Industrial Average (chart) finishing slightly in the red off 0.43%. The S&P 500 (chart) notched a slight gain of 0.09%, the Nasdaq (chart) +0.41% and the small-cap index Russell 2000 (chart) lead the way posting a 1.82% gain.

Tuesday’s triple digit loss for the Dow Jones Industrial Average (chart) could of easily unnerved the bulls and gave the bears hope that the much anticipated sell-off had begun. However, once again equities demonstrated their undeniable resilience and continues to find support with any attempt of a pullback or sell-off. Although the bears argue that volumes remain light, there is no denying that this is one of the most powerful trends to the upside that the markets have seen in years.

Have a great weekend 🙂

~George

For all of you college basketball fans, March Madness has arrived! For all of the investors and traders out there, will the bullish madness continue? I guarantee the short interest is exhausted and asking that exact question.

On the week, the Dow Jones Industrial Average (chart) closed basically flat at 12977, The Nasdaq (chart) closed the week up 0.42%, the S&P 500 (chart) +0.28%, and the small cap bellwether Russell 2000 (chart) lagged this week falling almost 3%. However, these key indices are off to the best start to a year ever and it seems like every time the market wants to sell-off, it is met with unprecedented support. I have been around these markets for almost 17 years and I cannot remember such resilience in equities. Call it an election year, call it an improving economy, call it that Europe is out of a catastrophic state, call it what you want, this freight train doesn’t seem to want to stop.

Technically speaking and according to the Relative Strength Index (RSI), the markets continue to trade near the upper end of overbought conditions, however, investors and traders alike don’t seem to care. Personally, I think a meaningful pull back in equities and commodities are long overdue, but I too have been expecting this for weeks now. One thing I know for sure is that the markets do not always give you what you expect when you expect it, so whether you have a long or short thesis, it’s best not to try to time the market. In closing and as a reminder, it is usually a good idea to keep protective stops in place should your position move against you.

Have a great weekend 🙂

~George