WALL STREET : Bulls Reclaim The Reins Up 0.5%

Dow Rebound as Japanese Quakes Boost Infrastructure, Energy Issues

All eyes were on Japan today, after an 8.9-magnitude earthquake – the country's largest in three centuries – sparked a fatal tsunami. However, while the news initially rattled the Street, stocks climbed out of the red around midday.

 

Bulls recaptured the 12K boundary.
Failed to sustain above
Mid Bollinger Band Resistance



Leading the pack were energy and industrial issues, as investors cheered lower oil prices and bet on a post-quake resurgence for infrastructure-related stocks like AK Steel (AKS) and Caterpillar (CAT). In fact, news of another 6.2-magnitude quake just northwest of Tokyo only added to the bulls' momentum, with equities blazing a steady path higher in afternoon trading. Against this backdrop – and thanks to news of another relatively solid month for retailers – all three major market indexes settled significantly north of breakeven, with both the Dow Jones Industrial Average and S&P 500 Index reclaiming psychological support.

The Dow Jones Industrial Average (DJIA – 12,044.40) flirted with a triple-digit lead in the final hour of trading, but pulled back to finish with a more modest gain of about 60 points, or 0.5%. Only five of the index's 30 blue chips bucked the trend, with Verizon Communications (VZ) leading the four laggards, while industrial issues 3M Company (MMM) and Caterpillar paced the 25 advancing equities. Procter & Gamble (PG), meanwhile, called the session a wash by finishing flat. Thanks to today's bounce, the Dow reclaimed the psychologically critical 12,000 level, but still finished the week with a 1% loss.

The S&P 500 Index (SPX – 1,304.28) added 9.2 points, or 0.7%, to climb back atop the 1,300 level. In similar fashion, the Nasdaq Composite (COMP – 2,715.61) advanced 14.6 points, or 0.6%. For the week, though, the SPX and COMP surrendered 1.3% and 2.5%, respectively, finishing south of their 10-week moving averages for the first time since late August.

 

Black gold dropped 3.1% this week

– oil's heftiest dip in a month

Crude futures extended their retreat to four straight sessions today, after earthquakes and tsunamis in Japan – the world's third-biggest oil consumer – fueled fears of lower demand. Furthermore, the front-month contract briefly explored double-digit territory, thanks to news that Chinese inflation rose by more than expected.

Oil prices, which have been a major component in driving equities markets in recent sessions, plummeted to as low as $99.01 as the "day of rage" protests in oil-giant Saudi Arabia were sporadic and mostly peaceful.

"There were built-in expectations of the maelstrom of discontent in Persian gulf" that didn't materialize, said an oil dealer.

Against this backdrop, April-dated crude futures gave up $1.54, or 1.5%, to settle at $101.16 per barrel. For the week, black gold shed a hefty 3.1% - oil's biggest week-over-week drop since the week ended Feb. 11.

TECHNICAL ANALYSIS
Dow Jones Industrial Average
The Dow closed higher due to short covering on Friday as it consolidated some of this week's decline but remains below broken trendline support. The high-range close sets the stage for a steady to higher opening on Monday. Stochastics and the RSI are bearish signaling that sideways to lower prices are possible near-term. If the Dow extends this week's decline, the 25% retracement level of the June-February rally crossing at 11,706 is the next downside target. If the Dow renews the rally off the late-February low, February's high crossing at 12,391 is the next upside target.

First resistance is the 10-day moving average crossing at 12,132.

Second resistance is the 20-day moving average crossing at 12,180.

First support is today's low crossing at 11,936.

Second support is the reaction low crossing at 11,803.

HAPPY WEEKEND