Courtesy of Blain.
Indexes were quite oversold yesterday and we saw a nice reflex rally Friday to offset that as oil bounced sharply. The S&P 500 gained 1.95% and the NASDAQ 1.66%. Despite today’s jump, for the week the S&P 500 lost 0.8% and the NASDAQ dropped 0.6%. In the larger picture today’s rally means nothing technically. U.S. retail sales rose 0.2% in January, above the 0.1% expected gain.
The S&P 500 has to get over 1900 and truly 2000 to make a change in complexion; while the NASDAQ has to get over 4650. These levels are quite a long trip away. But you could at any time have a rally that fills part of that trip.
The NYSE McClellan Oscillator was brushing along the first level of oversold yesterday at -45ish; it made up a lot of ground today.
The 2 areas which have been severely beaten this week – financials and energy were the keys to the rally. But these just appear to be the “rubber band” effect where things get so extended to the downside they revert to mean – recall all these bank charts we showed this week showed significant gap downs where the price was not even close to the 20 day moving average.
Oil recorded its largest one-day rise in seven years Friday, boosted by speculation about a possible production cut by the Organization of Petroleum Producing Countries. But WTI prices still suffered a weekly loss of 4.7% on the back of the market’s ongoing supply glut.
The market is taking the comments from the U.A.E. minister “seriously because the U.A.E. is doing an about face,” said Phil Flynn, senior market analyst at Price Futures Group. The U.A.E. was “saying a month ago a cut was going to be over their dead body basically,” said Flynn. “Well, maybe hell froze over.”
(Note the oil prices on stockcharts.com don’t always square perfectly with actual crude oil prices for some odd reason, so this chart only shows a 6% gain when in fact it was 12%)
JPMorgan’s stock gained 8.3% on Friday after CEO Jamie Dimon bought over $25 million worth of the company’s stock.
Twitter (TWTR) was another stock that reverted to mean as a lot of deeply oversold merchandise bounced Friday. Despite a 11% rally the stock is not even at the 20 day moving average – that is how you know a stock is struggling.
Groupon (GRPN) surged nearly 30% after it beat expectations late Thursday.
Wynn Resorts (WYNN) rose 15.8% after the casino operator reported strong quarterly profit.
Have a good weekend and we’ll see you Tuesday as markets will be closed Monday.
