Markets End Week with Another Gain

[Excerpted from Bill Cara's Daily Report]

At 3:23pm, nearing the close, the broad market was a tad underwater, biding time; but at the close of Friday’s session, there were very large gains and the RSI-7 had hit 90. The stunning computer-generated buy-on-close program was the only reason markets were soaring.

The DJIA (8,500.33 +96.53 +1.15%), S&P 500 (919.14 +12.31 +1.36%) and NASDAQ Composite (1,774.33 +22.54 +1.29%) all closed sharply higher for the third day in four this week.

The Toronto Composite (10,415.54 +23.17 +0.22%) seemed unimpressed, while the Toronto Venture Board (1,124.08 +18.92 +1.71%) did close strongly, driven by four straight days of rising oil and gas stock prices and a two-day rocket for the gold and silver bullion, which brought the promoters out in flocks. For the past two days, an already strong Canadian Dollar zoomed +3.0%, which is speculation based on rising commodity prices rather than prospects for economic recovery.

In NY, the Basic Materials (XLB +3.1%) and Industrials (XLI +2.1%) sectors were leaders, while Utilities (XLU +0.8%) was the laggard sector, although still strong on the day.

Among industry groups, all were higher at the close, but Hospitals ($RXH +3.6%) and Goldminers ($XAU +3.1%) were strongest. With all due respect to hospitals and goldminers, these are not industry groups that lead a sustainable Bull phase in equity markets.

The Cara 100 company stocks that lifted the most were international telcos, oils and mining, again no recipe for a solid cake. Too me it’s too much yeast being injected directly into my stomach, producing little more than hot air. Anyway, Russia’s MobileTeleSystems (MBT +7.2%), China National Offshore Oil Co (CEO +6.0%), and Canada’s Teck Corp (TCK) and Silver Wheaton (SLW), each up +5.7%. There were 19 losers of the 100 as well, and these were also popular international stocks, rather than American: Korea’s Kookmin Bank (KB -4.7%) after yet another missile firing in North Korea, India’s Tata Motors (TTM -4.3%) and Russia’s Vimpel-Communications (VIP -3.2%).

As a great help in pumping up the equity and commodity markets, the $USD plunged (79.34 -1.16 -1.44%). All major currencies soared against the USD: Yen (104.95 +1.75 +1.70%), Euro (141.36 +1.96 +1.41%), British Pound (161.86 +2.38 +1.49%), and Cdn Loonie (91.76 +1.95 +2.17%). I’ll comment below.

Earlier Friday, equity prices were quite strong in most countries. Shanghai remained closed, but Hong Kong (18,171.0 +1.60%), Japan’s Nikkei 225 (9,522.5 +0.75%), Aussie All Ordinaries (3,813.3 +1.58%), and India’s BSE 30 (14,625.3 6:+2.30%) all made more gains than the previous day’s losses.

Then in the European equity bourses, the French CAC (3,277.65 +0.43%), German DAX (4,940.82 +0.16%) and UK FTSE 100 (4,417.94 +0.69%) were higher, but actually dropped over +1% in the afternoon, which of ourse was prior to the 3:30pm ET moon-shot in NY.

In a volatile US bond market, the US long Bond ($USB 117.66 +0.56 +0.48%) managed a gain – the third in the past seven sessions, but second in a row, leading some advisors to recommend US government bonds. The yields were as follows for 30-year (4.338 -1.92 -4.24%), 10-year (3.465 -2.07 -5.64%), and 5-year (2.347 -1.37 -5.52%).

As nervous traders moved into Treasury bills, the yields closed lower for the 4th day in four this week with a yield of 0.130 -0.05 -3.70%.

Crude Oil ($WTIC 66.36 +1.28 +1.97%) soared again.

$GOLD futures also soared Friday (979.30 +19.60 +2.04%), which was a gain of $29.20/oz in two days.

Spot (cash) market prices closed the week as follows: Gold (979.45 +16.72 +1.74% 17:13pm ET), Palladium (234.0 +3.0 +1.30% 17:40pm ET), Platinum (1188 +24 +2.06% 17:40pm ET), and Silver (1188 +24 +2.06% 17:40pm ET).

Stock futures for the DJIA closed the week strongly (8527 +143 +1.71%).