Market Status: Market in correction.
Stocks up in Higher Volume: Aruba Networks – ARUN, Riverbed Technology – RVBV, NetApp – NTAP, Jinko Solar – JKS, VanceInfo – VIT, Under Armour – UA.
Comments: Stocks reversed higher in strong action Friday to finish on the upside. The indexes also ended near the top of the day’s range, which is a bullish sign. Three of the four major indexes dipped below their recent low but rebounded immediately.
Only the NYSE composite held above its recent low. It surged nearly 2% Friday, leading the major indexes. The Dow and the S&P 500 bounced 1.7% each, while the Nasdaq added 1.6%.
Volume rose across the board. It’s important to remember, despite the gains, the market remains in correction.
The major indexes were down for the week. The Nasdaq lost 1.2%, the S&P 500 0.7%, the Dow 0.6% and the NYSE composite 0.3%.
Economic news was mixed Friday. The revised GDP report for the second quarter was better than expected. But it still reflected how far growth expectations for the U.S. economy have fallen. The advance figure released July 30 was 2.4%. The Street expected 1.4% for the revised figure. It came in at 1.6%.
Stocks opened higher but negotiated a U-turn within 10 minutes.
Shortly after the open, Federal Reserve chief Ben Bernanke spoke in Jackson Hole, Wyo., at a retreat for central bankers. He downplayed the odds of a double-dip recession and said he expects growth to pick up next year. But he also said the economy “remains vulnerable.”
Meanwhile, Intel (INTC) warned of a softer Q3 than expected.
At first, the market didn’t know what to make of this mixed bag of news. But eventually the indexes shrugged it off and rose.
Small caps were especially strong. The S&P 600 small-cap index rose 2.7%. Top-rated stocks did well too, and they reflected the small-cap strength as well.
Bottom line – Continue to hold cash, keep your stops close and focus on building your watch list. Once the market turns to a confirmed uptrend, be ready to move back in.
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