Friday, May 6, 2011

Skimming Off the Fear Factor

Another week in the books for the crippled economy saw stocks rise on a better-than-expected jobs report and commodities take a bit of a breather as the dollar and bonds both gained.

for the week, the major averages were down anywhere from 1.3% to 1.7%, with the Dow faring best and the S&P the worst.

For analysis of the control factor in all trading, see this morning's post.

When the BLS' non-farm payroll report came out prior to the opening bell, futured roared back to life and equity markets opened sharply higher. The Dow was up as many as 175 points, but the rally fizzled as renewed weakness in Europe prompted a flight to safety to the US dollar.

News that Greece was pondering a move to leave the EU, or at least abandon the Euro as its main currency, kept the Euro sliding right into the weekend.

As the dollar gained strength, trades came off in risk assets, mainly equities, as investors were once again cheered then spooked by forces other than fundamentals.

Dow 12,638.74, +54.57 (0.43%)
NASDAQ 2,827.56, +12.84 (0.46%)
S&P 500 1,340.20, +5.10 (0.38%)
NYSE Composite 8,425.90, +28.50 (0.34%)

Advancing issues finished well ahead of decliners on the day, 4144-2356. New highs beat new lows on the NASDAQ, 68-36. The story was more exaggerated on the NYSE, where 133 new highs towered over 15 new lows. Volume was back in the doldrums, following heavy flight volume the previous two sessions.

NASDAQ Volume 2,007,823,250
NYSE Volume 4,907,953,500

After being whipsawed into submission, a few brave souls ventured back into the commodity trade, but it was definitely not for the faint of heart. NYMEX WTI crude oil continued to sell off, losing another $2.62, to finish out the week in NY at $97.18.

Gold bugs were welcomed back with open arms, as the shiny yellow metal yielded a gain of $19.30, to stand at $1492.40 as of this writing. Silver was less warmly received, but still managed to bounce of the lows and add 65 cents, to $35.31, though there is still concern another round of trimming is yet on the way.

The calendar for next week is rather light until Thursday, which kicks off with unemployment claims, PPI and retail sales, followed on Friday with the monthly CPI figures and the University of Michigan consumer sentiment index. With first quarter earnings now winding down, the markets will be looking for clues for direction, as this week's action has left many dazed and confused.

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