Risk aversion took hold on Friday afternoon, as the stock market experienced a selloff during the final 30 minutes of trading.
Investors became risk-averse going into the weekend, taking profits as the S&P 500 Index remained just below its record high. The stock market experienced a strong wave of selling during the final thirty minutes of Friday’s trading session. After maintaining solid advances through most of the day, both the Dow and the S&P 500 slipped into the red at approximately 2:30. Once both indices climbed back above the breakeven level just past 3:00, bearish head-and-shoulders patterns began to form on both charts. By 3:45, both patterns were fully-formed and an abrupt selloff ensued.
The Dow Jones Industrial Average (DIA) lost 29 points to finish Friday’s trading session at 16,103 for a 0.19 percent decline, slipping 6 points below its 50-day moving average of 16,109. The S&P 500 (SPY) retreated 0.19 percent to close at 1,836.
The Nasdaq 100 (QQQ) declined 0.25 percent to finish at 3,662. The Russell 2000 (IWM) advanced 0.22 percent to end the day at 1,164.
In other major markets, oil (USO) declined 0.52 percent to close at $36.69.
On London’s ICE Futures Europe Exchange, April futures for Brent crude oil declined 54 cents (0.49 percent) to $109.76/bbl. (BNO).
April gold futures advanced $6.40 (0.49 percent) to $1,323.30 per ounce (GLD).
The transportation sector climbed back to its flight level on Friday, as the Dow Jones Transportation Average surged 0.78 percent to 7,308, rising above its 50-day moving average of 7,279 (IYT).
In Japan, the exchange rate for the yen continued to be the dominant factor in stock market activity. Japanese stocks soared as the yen weakened to 102.57 per dollar during the last hour of Friday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). Shares for Panasonic soared 3.91 percent on the Tokyo Stock Exchange. The Nikkei 225 Stock Average jumped 2.88 percent to 14,865 (EWJ).
In China, reality finally set in after Thursday’s slight stock market dip, despite the fact that the HSBC Flash China Manufacturing PMI for February fell to a seven-month low of 48.3 from January’s final reading of 49.5. The Flash Manufacturing Output Index also fell to a seven-month low, hitting 49.2 from January’s 50.8. A reading below 50 indicates contraction. The state of denial wore off on Friday, when the Shanghai Composite Index sank 1.17 percent to 2,113 (FXI). In Hong Kong, advances in the telecom sector sent the Hang Seng Index climbing 0.78 percent to 22,568 (EWH).
In Europe, stocks advanced as French equities took the lead after a week of solid earnings reports. So far this year, the French CAC 40 Index is up 1.98 percent – outperforming Germany’s DAX Index, which has risen only 1.09 percent. The Euro STOXX 50 Index finished Friday’s session with a 0.32 percent advance to 3,131 – climbing further above its 50-day moving average of 3,064. Its Relative Strength Index is 62.97 (FEZ).
Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,814 after finishing Friday’s trading session with a 0.19 percent decline to 1,836. Its Relative Strength Index (RSI) fell from 59.21 to 57.86. The MACD is climbing above the zero line and the signal line just crossed above the zero line, suggesting that the S&P could resume its advance during the immediate future.
On Friday, four sectors advanced and five sectors declined. The energy sector took the hardest hit, falling 0.79 percent.
Consumer Discretionary (XLY): +0.20%
Technology: (XLK): -0.39%
Industrials (XLI): +0.12%
Materials: (XLB): -0.26%
Energy (XLE): -0.79%
Financials: (XLF): +0.19%
Utilities (XLU): +0.12%
Health Care: (XLV): -0.19
Consumer Staples (XLP): -0.22%
Bottom line: Investors became risk-averse just before Friday’s closing bell, sending the major stock indices into the red for the weekend.
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