Swing Trading Strategies & Stock Picks Since 2003

Weekly Market Commentary- (May 3- May 8)

DJIA Industrial Average

Open: 11009.60

High: 11203.37

Low: 9787.87

Close: 10380.43

Change: -628.18 (-6.1%)  

RSI: 27.4

MACD:  43.71

Strategy: The stocks recorded a strong plunge in the week after a long gap following the suspected repercussions of increase in credit worries on downgrade of some Eastern European countries. It is time to stay cautious, even though the $750 billion bailout package of troubled EU countries has been approved by IMF and European unions.

The Weekly Commentary

US markets stayed very volatile and sensitive to fear factor or higher VIX, in  the week ended April 7.

The Dow lost a record 628.18 points, or 6.1% in a single week, to settle at 10380.43. The widespread losses across the Dow and S& P 500 indices eventually ended up eroding the year to date’s entire gains after the week dominated by bears.

Wall Street's fear gauge, the CBOE Volatility index, or the VIX, continued to rise throughout the volatile week, and ended on Friday at a record level of 41.43, at a fresh 12 month high.

Europe's debt woes continued to be in focus as riots continued in Greece. British elections failed to produce a ruling majority, resulting in a hung Parliament for the first time since the 1970s and creating some uncertainty.

It was a unique week, in which the Nasdaq canceled trades on 296 stocks that saw their prices fluctuate by at least 60% between 2 p.m. and 3 p.m. ET on Thursday, including Accenture, which plunged from $40.13 to just one cent before recovering.

But trades were not canceled for Dow components Procter & Gamble, which  also fell 37%, and 3M, which lost 22%, on the Dow on Thursday.

The unemployment rate remained at around 9.9% as per the employment report released for April, which was a shade higher than 9.7% unemployment rate recorded for March.

Pending home sales rose 5.3% in March after climbing 8.3% in February as against expectations of 5% from economists.

Troubled insurer AIG reported a quarterly profit Friday morning, against a year-ago loss, as the company's insurance business continued to stabilize.

Time Warner reported its highest quarterly earnings in company’s history, easily beating Wall Street's forecasts.

This was a unique week in which almost all the sectors closed with some losses.

U.S. light crude for June delivery continued to fall in the week, and settled at much lower level of around $76.75 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose to settle at $1,210.40 per ounce.

The Week Ahead

Monday:

Ben Bernake Speaks

Tuesday: ICSC-Goldman Sachs Retail Sales Weekly Data

Wholesale Trade for March

Wednesday

Weekly EIA Petroleum Status report

Thursday

Weekly jobless claims report

EIA Natural Gas report

Ben Bernake Speaks

Friday

Consumer Sentiment

Industrial production

Retail Sales