As I suspected in my last Market Update to my subscribers, this week was a seesaw week again which had 3 down-days and 2 up-days for the Dow, 3 up-days and 2 down for the Nasdaq, 3 down-days and 2 up for the S&P500.

But still. The Dow advanced 1.3%, the Nasdaq set the week's pace, rising 2.2%, while the S&P 500's was up 1.1%.

With a fresh burst of optimism that the US economy was weathering the global financial storm better than had been feared helped fuel another advance for the markets this week. The mood was helped by the announcement of further co-ordinated action by the Fed and other central banks to ease money market stress.

The Federal Reserve chose to cut short-term interest rates for the fourth time this year - by 25 basis points, as widely forecast, to 2% (down from 4.25% at the beginning of 2008) - saying it remains troubled by the economic outlook but signaling that it now is inclined to leave U.S. rates static for a while. The rate now is at it's lowest level since 2004.

But U.S. stocks lapsed into negative territory on Wednesday after the Fed's decision erasing all gains for the day after a rally fueled by better-than-forecast corporate earnings and first-quarter U.S. economic growth faded amid debate over the Federal Reserve's latest rate cut and statement. Investors were largely uncertain how to interpret the Fed's statements after the rate cut.

Thursday and Fridays sessions were then fueled again by largely positive economic data and the job report that was not as bad as feared! Job losses were far less than economists had thought.While most analysts think that the US economy is in a recession at the beginning of the year, job losses have been low so far compared with previous downturns.

The employment data continues to point to the economy being in a recession, but at this point the recessionary forces from the overall labour market do not appear to be intensifying.

The latest job losses were concentrated in cyclical sectors such as manufacturing, construction and retail, while healthcare and business services proved to be more
resilient. And that's typical again. If you've been with me for a while already, you
will probably still remember the article "Cyclical Stocks vs. Growth Stocks" that I wrote back in 2005. If not, then please feel free to go to:

www.stockbreakthroughs.com/newsletters/cyclic-vs-growth-stocks.htm

Another thing that gave stocks a boost this week was that the first quarter gross domestic product was better that expected, rising by 0.6% in the first quarter on inventories, consumers and exports. This, and an earnings season that hasn't really been that bad, taking the current market situation into account, shows - at least right now - that the recession is rather mild and could be counteracted in a relatively short time in comparison to other recessions. If nothing serious is still to come!

2 Weeks ago I gave my subscribers a whole batch of interesting stocks to observe. Among others Apple that was fighting with a $170 resistance. It went above resistance 5 bars ago which was a good time to get in taking the market situation and Apples good earnings results into account. When $160 became resistance and Apple went above that level, I got in on a call option. This went up nicely as you can see when looking at Apple's chart. I set a trailing stop of $4 that I have now reduced to $3.

So whatever happens now, even if Apple will pull back tomorrow, I will definitely be in positive territory protecting most of my profits.

Have a great week! 


Yours in Successful Trading,

Ricky Schmidt

www.stockbreakthroughs.com
www.stockbreakthroughs.com/blog