U.S. equity values soared Friday as investors responded favorably to a Labor Department report, which showed unexpectedly slower growth for new jobs. The data was encouraging because it assuaged concerns about inflation and suggests the Fed may pursue a more restrained approach to interest rate adjustments in the coming months.
The stock market enjoyed its best week of 2005 with the Dow Jones Industrial Average climbing 123 points to 10,716, while the NASDAQ gained 29 points to 2,086, and the S&P 500 Index closed up 13 points at 1,203. Overall, the popular equity indices advanced nearly 3% during the past five days.
Our portfolio was awash in a field of green with the majority of issues rising during the session. Among the standout positions were oil-related shares such as FX Energy (NASDAQ:FXEN) and Rowan Companies (NYSE:RDC), the latter of which closed at an all-time high. Palomar Medical Technologies (NASDAQ:PMTI) was also a solid performer, up nearly 4% after a successful test of technical support at the 50-DEMA. Global Crossing (NASDAQ:GLBC) ended the day almost unchanged at $18.70, well above the sold (put) strike at $15. However, the recent volatile activity in GLBC has been cause for concern and conservative traders should likely have closed the position earlier in the week to avoid any potential losses. (The next portfolio update will reflect that trade).
Looking forward, the market seems poised to eclipse the 2004 summit in the coming month, despite all the prophecies and forecasts associated with the widely touted "January Barometer." Our analysis implies a respectable follow-through as earnings season winds down, followed by a period of consolidation as investors search for signs of the next big disaster, which always seems to loom just beyond the horizon of the financial world.
As far as new plays, the upside activity has certainly limited the number of viable entry opportunities for bullish positions. However, we may be able to find a few viable candidates before the opening bell on Monday morning. Check the OW portfolio web-page or your E-mail inbox for further updates this week-end.