Dow Erases Deficit on Bulls' Eleventh-Hour Coup

DOW CLINGS TO 10K WITH LATE SURGE

Stocks spent most of the session wallowing in the red today, as economic troubles across the pond and an ambiguous unemployment report weighed on the Street.

However, thanks to a dramatic eleventh-hour coup by the bulls, the major market indexes pared all of their losses by the close, settling on the north side of breakeven.

At the worst levels of the session, the blue chip average was down 167 points. A bounce in the final two hours pushed the Dow 176 points, allowing it to eke out a small gain. Pheeewwww!!!! :P

The Dow Jones Industrial Average (DJIA – 10,012.23) reversed course in the 11th hour of trading, adding 10.05 points, or 0.1%, by the close. Eighteen of the Dow's 30 components finished higher, led by Cisco Systems (CSCO) and Alcoa Inc. (AA), while industrial issues Boeing (BA) and General Electric (GE) paved the road into the red; Johnson & Johnson (JNJ) settled right where it started. However, despite the Dow's dramatic recovery today, the blue-chip barometer finished beneath its 20-week moving average for the second straight week, surrendering 0.5%.

The S&P 500 Index (SPX – 1,066.19) also turned higher in late afternoon trading, advancing 3.1 points, or 0.3%. Nevertheless, like its Dow sibling, the SPX settled south of its own 20-week trendline for the second consecutive week, giving up 0.7%.

Not to be outdone, the Nasdaq Composite (COMP – 2,141.12) also performed an about-face late in the session, advancing 15.7 points, or 0.7%. For the week, the COMP also remained beneath its 20-week moving average, but fared the best of the major indexes, backpedaling only 0.3%.

The week's trading offered a fairly downbeat assessment of the action. The afternoon rally would seem to lighten the mood and suggest that the bulls haven't been scared away. However, note the daily charts above. The indexes are still at or below the lows from last week.

Crude Falls US$1.95 Surpressed By Rising Dollar
March crude oil closed lower on Friday and tested the 87% retracement level of the September-January rally crossing at 69.58. The mid-range close sets the stage for a steady opening on Monday.

Stochastics and the RSI are diverging and are turning neutral to bearish signaling that sideways to lower prices are possible near-term. If March extends the decline off January's high, September's low crossing at 67.46 is the next downside target.

Closes above the 20-day moving average crossing at 76.85 are needed to confirm that a short-term low has been posted.

First resistance is the 10-day moving average crossing at 74.36. Second resistance is the 20-day moving average crossing at 76.85. First support is today's low crossing at 69.50. Second support is September's low crossing at 67.46.

And that is where I will pick up on Monday.

Have a great weekend.