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Saturday, February 19, 2011

WALL STREET : Bulls Score 3rd Straight Weekly Win

Despite global uncertainty, the major market indexes elbowed higher
Dow mark best 3-week performance since August 2010
Traders today shrugged off another monetary-tightening measure out of China, as Beijing once again raised its capital reserve requirement for banks. Unfazed, the major market indexes jumped higher out of the gate, extending a recent string of multi-year highs. However, the bulls tempered their enthusiasm around the halfway point of the session, with traders leery of leaving too much cash on the table over the long holiday weekend -- particularly as the Group of 20 finance ministers assembled in France for a two-day meeting to address global economic concerns. Wall Street also kept a wary eye on sociopolitical unrest in the Middle East, as violent anti-government protests in Bahrain stretched into their fifth day. The net result was a day of modest gains for U.S. equities, with stocks closing the door on their third straight winning week.

The Dow Jones Industrial Average (DJIA – 12,391.25) fared the best of the three major indexes, collecting a gain of 73.1 points, or 0.6%. Only nine of the 30 blue chips sat out the rally, with Alcoa (AA) leading the laggards and Coca-Cola (KO) finishing flat. Meanwhile, a robust sales report helped propel Caterpillar (CAT) to the top of the heap. The Dow finished just a stone's throw from its new two-year peak of 12,391.29, and ended the week on a healthy gain of about 1%.

On the other hand, the S&P 500 Index (SPX – 1,343.01) and the Nasdaq Composite (COMP – 2,833.95) spent plenty of time on both sides of breakeven. The SPX tagged an early two-year high of 1,344.07 before settling for a daily advance of only 2.6 points, or 0.2%. Likewise, the COMP climbed to a new three-year best of 2,840.51 -- its highest price since October 2007 -- but pared its gains by the close, eking out a positive finish by just 2.4 points, or 0.08%. The SPX added 1% for the week, while the COMP rose 0.9%.

Crude Futures Slip Ahead Of Month End Expiration
Front-month crude futures swallowed a modest loss today, despite ongoing turmoil in the oil-rich Middle East. However, the more active April contract notched a slim gain, suggesting that traders might simply be adjusting their portfolios ahead of expiration.

Crude-oil futures gave up the bulk of early gains as investors grew cautious ahead of an upcoming contract expiration and a long holiday weekend that could involve more violent protests in Bahrain, Yemen and Libya.

“There’s all this uncertainty going on with the Middle East. A lot of traders, instead of going long oil, are just cutting their positions and kind of letting go,” said a senior commodities analyst.

Crude oil for March delivery shed 16 cents, or 0.2%, to end at $86.20 per barrel. Meanwhile, April-dated crude climbed 87 cents, or 1%, to settle at $89.71 per barrel. On a weekly basis, oil futures rose roughly 0.6%.

Gold Rises On Safe Haven Demands
On the other hand, a strong underpinning of safe-haven demand propelled gold to its fifth straight positive session. Gold for April delivery ended the day up $3.50, or 0.3%, at $1,388.60 per ounce, bringing its weekly gain to 2.1%. However, silver was the real standout in the metals market today. The March contract gained 73 cents to settle at $32.296 per ounce, after tagging its highest price in more than three decades amid hopes for improving demand.

Technical Analysis : DJIA 19 Feb 2011
The Dow closed higher on Friday as it extends it's recent rally. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are overbought but remain neutral to bullish signaling that sideways to higher prices are possible near-term.

If the Dow extends this rally, the January 2008 high on the weekly continuation chart crossing at 12,767 is the next upside target. Closes below the 20-day moving average crossing at 12,123 are needed to confirm that a short-term top has been posted. First resistance is today's high crossing at 12,375. Second resistance is the January 2008 high on the weekly continuation chart crossing at 12,767. First support is the 10-day moving average crossing at 12,258. Second support is the 20-day moving average crossing at 12,123.
WALL STREET >>> Levels to Watch in Trading:
Dow Jones Industrial Average (DJIA – 12,391.25) - support at 10,500; resistance at 13,000
S&P 500 Index (SPX – 1,343.01) - support at 1,100; resistance at 1,400
Nasdaq Composite (COMP – 2,833.95) - support at 2,400; resistance at 2,850


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