Craig Johnson’s

Stock Market Recap for Last Week– Stocks jumped higher Friday mostly due to an employment report that was better than expectations. Some traders were worried that the report would come out far worse than expectations and drop the stock market quickly in the pre-open before the market’s official open. Instead stocks jumped sharply higher in the pre-open and added to those earlier gains when the markets opened. Those short the market scrambled to cover their short positions at much higher prices. Friday’s gains added to what had already been a strong week. Tuesday marked the end of April and also the sixth consecutive month the S&P 500 recorded a monthly gain. In fact, ten of the last eleven months have produced monthly gains for the S&P 500. Earnings reports dominated much of last week’s trading as did a batch of economic reports. The Federal Open Market Committee concluded their two-day meeting on Wednesday with a policy statement saying that “fiscal policy is restraining economic growth.” They also indicated that they may increase or decrease their bond buying to help the economy. One would have to conclude from the policy statement that interest rates will remain very low. Low rates and more liquidity have been and should continue to be favorable for the stock market.

Current Outlook and Comment – The S&P 500 closed at 1614.42, while the Dow Jones Industrial Average closed the week at 14,973.96. Both indices recorded all time record highs and all time record high closes last week. The most positive thing for the market was seeing the Russell 2000 break out to new highs after being stymied in its attempts during the past few weeks. A healthy advance requires broad market participation, which recently had been lacking. The stock market is back to being overbought, but quite resilient even when selling enters the market. The first quarter earnings season reporting continues this week, but the number of reports are decreasing from the hectic pace of the past two weeks. Gold has bounced off of its lows, but has significant areas of resistance to break through if the downtrend is to be reversed.