Market Analysis

• MSFT hangover is able to cool techs, however the SP500 can clear resistance
• Oil blitzes back up toward 120 after an appearance of a crack in the oil pan
• Bonds carry on their flight, and so did the dollar
• Most of our earnings season is over, however the economic calendar is filled
• Techs and the Big 3 – will the lead again?

The market has problems, but it will make it through. Microsoft defended its current quarter performance in a state of mind, which shows that ‘what is good for Apple, which is beating us about the head and shoulders is good enough for us’ stand. Contrary to the performance of Apple that rebounded smartly and posted a gain of almost 4% after its somewhat disappointing earnings, MSFT failed to rebound, unless you consider finishing $0.23 off its session low during a 6.19% loss as a rebound. Unlike Thursday’s occurrence, when NASDAQ bounced back and broke its February high level in a notable breakout, NASDAQ had to drag MSFT around all through the session since it was behind.

It was not helpful either that RIMM has reported that it acquired problems with its 3-G BlackBerry for AT&T and that it may be the cause of a delay. RIMM plunged earlier in the session, but rebounded to end at a loss of 3%. In addition, oil surged back up even as the dollar climbed, tapping at $119 once more (118.93, +2.87). Interest rates rose again for the second time in the last two weeks.

This session was solid. Breadth was mushy and volume backed off, but the market overcame disappointing news, held near support at the 10 day EMA, and rebounded with leaders bouncing back, and as noted, a new breakout by SP500. The volume was very large on the breakout, but the breakouts were piling up and that was an extra-ordinary development for the health of the market.

SP500 joined NASDAQ and DJ30 in their breakouts during the peak in early February, makes it ‘official’ for an up trend at the present time for all the three of the large cap indices. Basically, they have all made new highs since bottoming on the sell off, surpassing the prior highs in the 3.5-month base. The technical move is important enabling to focus on overall market and individual indices. As mentioned above that actually makes it disappointing, is the low volume move on the SP500′s. However, you take what you can when you can when recovering from a serious correction.

It surprised us this week after they broke lower to adjust given the dollar’s sudden popularity, but DESPITE a stronger peso the Big 3 (energy, ag, and metals) came right back on Friday . . .or, excuse me, . . . the US dollar. Extra. This was even better than it sounds keeping in mind the fact that the technology sector was soft due to the MSFT and RIMM issues. Even then, however, RIMM rebounded to hold near support and thus remains in great shape. However, even with those, the RIMM has rebounded and held support, and still remains stable. Furthermore, while others are testing or starting to bounce back up after testing near support following a breakout move, plenty of leaders continue to form up good bases and are set to breakout.

Excellent. Others moved higher, and showed no symptoms of use, like the transports sector, including trucking, rails, and shipping. Money keeps on moving into new areas as well as mature areas when the occasion arises. Positive activity.