Friends
Friday was a day full of moves as we had the G7 central banks overnight agree to a coordinated intervention to keep the Japanese Yen from continuing its climb. As the Japanese currency rises vs. other currencies, it becomes more difficult for Japanese companies to sell their goods overseas thus creating a difficult climate for them to rebuild in. We also, last night, got word of the U.N. agreeing to enforce a no fly zone in Libya. As trading began this morning, word came from the Gadhafi’s camp of a cease-fire (perhaps he took the threat seriously) and the market got off to a very nice start. Stocks jumped about 150 Dow points in the first half hour. By the end of the day, with a weekend of uncertainty looming, stocks drifted back down a bit to end the day up 84 points on the Dow Jones Industrial Average.
As for the S&P 500, it closed near the 1279 mark, which leaves us just below the 1283 resistance level but comfortably above the 1249 major support level. Of course, things could happen in Japan, or Libya for that matter, over the weekend that could make these levels irrelevant, but these are the levels that we are watching for now.
When all is said and done, considering the amount of news the market had to endure this week, stocks held in rather well. At this point, this is about the type of pullback we would have expected in a normal (if there is such a thing) bull market. Stocks needed to cool off, and the events of the last 30 days certainly gave traders a reason to sell. The key is going to be whether the long-term global growth trend has been interrupted for now, or with some improving news out of Japan, will we get right back on track? The trend of the past six months in the market has definitely been broken. We will see if it can be quickly fixed and the advance resumed, or if it is going to take some time and pain to rebuild the momentum.
We’ll be here bright and early on Monday. Let’s hope the weekend goes well.
Have a nice weekend everyone.
