Swing Trading Strategies & Stock Picks Since 2003

Dow Industrial Average

Key Statistics: Mar 18

Open: 10733.44

High: 10784

Low: 10728.15

Close: 10776.98

Change: 45.50 (0.42%)

RSI: 98.59

MACD: 111.13

Strategy

The recent uptrend continues to rally upwards at a modest pace without any roadblocks which has been ably supported by positive economic indicators. However, there are chances that markets may witness some correction again as traders may choose to book profit before change of week, as the indices appear to be overstretched.

Market Commentary

The US stock markets rallied for a eighth straight session and built up on the previous gains made in the week. The Dow Jones industrial average gained nearly 45.50 points, or 0.41% to close near the highs of the day at 10776.98 points. However, signs of tiring out in the market were evident in market, as S&P 500 shed 0.03% in the session to close at 1165.69 points in the session. Even the tech heavy Nasdaq composite rallied marginally 2.19 points, to close Thursday’s session around 2370 points.

However, most S&P 500 U.S. stocks fell on speculation that the Federal Reserve will increase its discount rate tempered gains spurred by further evidence that the economy is strengthening without stoking inflation.

The US Dollar jumped 0.8 percent to 80.257, its biggest gain in a month.

Amongst the Dow constituents, Bank of America Corp. and Alcoa led the declines that sent financial and energy companies lower. However, Boeing Co., DuPont Co. and 3M Co. led gains closer to Dow Jones Industrial Average its 18-month high.

FedEx Corp. surged as its profit more than doubled. The improvement in shipping volume for FedEx is seen as a good sign for the economy. However, the stock ended almost flat on Thursday.

Nike Inc. rallied on higher-than- estimated earnings amongst the non index movers.

On Thursday, regional banks such as KeyCorp, SunTrust Banks and Fifth Third Bancorp all fell following warning by Citigroup that financial stocks have already got overvalued. Larger financial firms to fall in sympathy included Morgan Stanley and Bank of America.

The Philadelphia Fed index, released after the start of trading, rose to 18.9 in March from 17.6 in February, thus beating the street expectations.

The Consumer Price Index (CPI) was unchanged in February after rising 0.2% the month before, according to a government report released before the start of trading. In another economic indicator released by labor department, the number of Americans filing new claims for unemployment fell to 457,000 last week from 462,000 the previous week.

Meanwhile Greece warned Thursday that it will have to tap the International Monetary Fund for help if the European Union can't agree next week to a plan of attack that will help it cut its borrowing rates. Such a measure could weaken the Euro further over the coming weeks.

Out of the 30 Dow constituents, 21 stocks moved up and the other 9 stocks slipped in the Thursday’s session. However, in case of the broad based S&P 500 index, 209 rallied marginally in the session and another 279 stocks shed some ground.

In the Thursday session, the advancing sectors included Industrials (+0.7%), Telecom (+0.6%), Health Care (+0.6%), Tech (+0.2%). The major losers included energy sectors, materials and materials sectors.

U.S. light crude oil for April delivery fell 73 cents to settle at $82.20 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $3.30 to settle at $1,127.50 per ounce. However, economists are skeptical of further gains in gold in near future.

The Day Ahead

No major economic indicators are to be released on Friday.