Courtesy of John Nyaradi.
Major U.S. stock market indexes hit all time highs this week on low volume and declining momentum
U.S. stock market indexes closed out a Holiday shortened week with new record closing highs for the Dow Jones Industrial Average (NYSEARCA:DIA) and S&P 500 (NYSEARCA:SPY)
The S&P 500 (NYSEARCA:SPY) set a new closing high of 1569.19 on March 28th but missed its all time intraday high of 1576.09, last seen on October 11, 2007.
The Dow Jones Industrial Average (NYSEARCA:DIA) set another closing high on Thursday at 14,578. Both major U.S. stock market indexes posted double digit gains for the first quarter and the bullish stock market action came in the face of headwinds from Cyprus and uncertainty in Europe and less than bullish economic news at home.
The Nasdaq 100 (NYSEARCA:QQQ) gained o.31%, finishing the quarter up 8.3% from its opening price, while the Russell 2000 (NYSEARCA:IWM) gained 14% for the first quarter.
On My ETF Radar
stock courtesy of StockCharts.Com
In the chart above, we can see how the S&P 500 (NYSEARCA:SPY) is in overbought conditions with slowing momentum. The S&P 500 (NYSEARCA:SPY) and Dow Jones Industrial Average (NYSEARCA:DIA) also continue climbing amidst overall volume that is approximately 20% below average and now the S&P 500 (NYSEARCA:SPY) is against the upper band of its current trend line.
ETF News You Can Really Use
Good news last week was found in a rising Case-Shiller home price index and gains in consumer confidence, spending and income.
Q4 GDP was revised upwards to 0.4% but missed estimates of a 0.5% gain.
Less rosy statistics came from initial jobless claims which jumped unexpectedly and also unexpected falling home sales.
The Crisis in Cyprus continued with the banks reopening amid capital controls and back and forth disputes over whether or not Cyprus would be a “template” for other troubled European countries. Reports indicate that large, uninsured depositors could lose up to 60% of their assets in the forced restructuring of the country’s two major banks.
Chicago PMI fell unexpectedly to 52.4, still in expansion territory but below expectations and many foreign stock exchanges, including the German DAX and Shanghai stock indexes, lost ground for the week.
Upcoming Economic Reports:
Next week brings an impressive array of economic reports that could be stock market moving including:
Monday: March Markit PMI, March ISM Manufacturing, February Construction Spending
Tuesday: March auto sales, February Factory Orders
Wednesday: March ADP private sector payroll report, March ISM services
Thursday: Weekly Jobless Claims
Friday: March Unemployment, March Non Farm Payrolls Report
Bottom line: U.S. stock market indexes continue climbing against fundamental and technical headwinds. Important factors this week will be the situation in Europe as Cyprus struggles with its crisis and investors watch for signs of capital flight and contagion spreading through the southern tier of Europe. The “best six months of the year” for the stock market are rapidly drawing to a close as we come to “sell in May and go away” and several major technical indicators are close to “sell” signals.
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