A week ago the market was struggling, in large part due to concerns that demand for smartphones has fallen and Apple (AAPL) was likely to post a weak report and cut guidance. A number of suppliers, including Taiwan Semiconductor (TSM) , had reported slowing demand from Apple.
When Apple reported good numbers on Tuesday, the stock gapped up and held well but that strong action did not spill over to the broader market. The indices looked downright gloomy on Thursday but an intraday turn helped to improve the tone. Finally, on Friday, the buyers came to life after it was reported that Warren Buffett had substantially increased his stake in Apple. That drove the stock to a new all-time high and carried along a slew of other stocks.
Breadth was exceptionally strong Friday, with around 5,200 advancers to just 1,860 decliners. New 12-month highs expanded to nearly 200 but there were 150 new lows. That is an indication that the indices are still substantially down from the highs we hit in late January.
The most positive thing about the action Friday was that there was some real momentum. Traders were chasing some stocks and there were some good-sized moves. My Stock of the Week, Cheniere Energy (LNG) , was a good example, as it increased 7.3% for the week.
The indices still have problems. The S&P 500 is ping-ponging between its 50-day simple moving average and its 200-day moving average. Support held again after the reversal on Thursday but if it is tested again it is going to make some folks very nervous.
Next week the China trade issue will once again be in the forefront and the potential for a pullback if no deal is reached is quite high. We will also have more focus on interest rates as market players digest the April jobs news. The headline number came in a bit soft and that lifted bonds a bit and caused the dollar to pull back. Worries about inflation are going to continue to bubble up.
I suspect it is going to be a bumpy ride and definitely would be surprised if Friday's strength turns into a good old-fashioned V-shaped move -- but I've been surprised before.
Have a great weekend. Do something fun. I'll see you on Monday.