What a finish to a very volatile week. The past three sessions have seen gaps at the opening of the day in completely opposite directions - up Wednesday, down Thursday, and up again Friday. There was really no news today to pin on the gap up and rally other than optimism that "something" will get done with the Cyprus situation early next week. This is one of those weeks that felt like two or three weeks in one as we returned to the days of Euro-drama. Barry Ritholtz at The Big Picture did a nice summation of the week's events. In the end the market's did not finish much different than from where they started but with almost every day being a violent move up or down, we did move around a lot to get nowhere. Friday the S&P 500 gained 0.72% and the NASDAQ added 0.70%; quite a bit of this came in the closing few minutes of the day as the S&P jumped 2 points in the closing 2-3 minutes.
Despite the rally we did not get back into these ascending channels on either the S&P 500 or NASDAQ Friday; very close on the former but no cigar. So the question is, will this be a repeat of February where there was a week and half period below which eventually lead to nothing? We have a lot of the same things happening now where consumer staples and utilities and healthcare led the charge this week. Historically this is not a great sign, but in February it didn't trigger a bigger selloff. It is very difficult to use historical precedent when the central banks are so adamant about higher prices and are forcing in so much liquidity. But generally boring non cyclical type of sectors leading is a shot across the bow, not a sign of ever upward prices.
First the indexes:
Now we see again the staples, utilties, and healthcare taking the reigns.
Meanwhile the cyclical "pro growth" sectors such as financials, transports, energy and semiconductors were the laggards of the week.
Meanwhile, bonds did not retreat today despite the equity market rallying - this is not generally how it works. Is the well followed ETF iShares Barclays 20+ Year (TLT) as high as February? No. That's a positive. Is it potentially forming a bullish inverse head and shoulders? Too soon to tell - keep in mind bonds usually move in opposition to equities, so if this bullish formation is slowly being created it does not mean great things for stocks in the future - watch this closely and see if it breaks over the blue box.
Copper and silver - both generally economic indicators ALSO are not doing well. Yes, they have stunk for a long time but it is a strange situation here where so many normal indicators that would indicate a correction is here or arriving are waving their hand but the equity market is not listening. One day in hindsight they will all matter but for now - no.
Next week will be a 4 day week with the holiday Friday so we'll see if things calm down or volatility is back for the interim period.