Has the market lost its mojo?

The week ahead will signal if the market has peaked or is just taking a breather. Earnings from Lennar, Walgreen and Paychex will help answer the question. So will reports on pending home sales and Chicago Purchasing Managers Index.

By Charley Blaine Mar 23, 2012 8:56PM
Charley BlaineIf you follow the stock market's trend lines, you're within your rights to wonder if the market is losing its momentum.

The Dow Jones industrials ($INDU) fell for the third week in the last four and suffered their worst weekly performance of the year. The Standard & Poor's 500 Index ($INX) finished at 1,404 on March 16, its best close since June 2008, but ended this past week at 1,397. Apple (AAPL) closed above $600 for the first time on Monday but ended the week at $596.05.

This coming week should help answer if the magic of the big rally since October is fading. Earnings from Lennar (LEN), Walgreen (WAG), Mosaic (MOS) and Best Buy (BBY) will test investors' optimism.

In addition, there are more reports on housing and a big report from the Chicago Purchasing Managers on tap.

Post continues below.
There are some reasons to be a bit wary.

The Dow finished the week down 1.2% at 13,081. It hit a closing high of 13,239 on Monday and faded for the next three days and rallied modestly on Friday. The S&P 500 and Nasdaq Composite Index ($COMPX) had similar performances: up on Monday, struggles for three days and small rallies.

The S&P 500 and Nasdaq are selling more than 10% above their 200-day moving averages, often a signal that an index is overbought.

The Nasdaq's Relative Strength Index, another way to see if something is overbought, is at 74.30, the highest level since Feb. 17. An RSI reading above 70 traditionally says something is overbought.

Lastly, April is nearly here, and the old saying is sell in May and come back in October. The market is off to its best start since 1998, and no one thought the S&P 500 would be up 11% or so this soon. Moreover, the market hit a 2011 peak on April 29 and didn't return to that level until February.

But -- and this is important -- the indexes themselves don't look like they're ready to implode. They're trading within defined channels. So, barring a major external event, maybe war between Israel and Iran, a pause seems the most plausible scenario.

Markets for the week



3/23/2012

3/16/2012

% chg.

YTD chg.
Dow Industrials

13,080.73

13,232.62

-1.15%

7.06%
S&P 500

1,397.11

1,404.17

-0.50%

11.09%
Nasdaq 

3,067.92

3,055.26

0.41%

17.76%
Russell 2000

830.03

830.18

-0.02%

12.03%
Crude oil 

$106.87

$107.06

-0.18%

8.14%
(per barrel)











U.S. Dollar Index 

79.58

80.08

-0.63%

-1.17%
10-yr. Treasury

2.24%

2.30%

-2.65%

19.56%
Gold

$1,662.40

1,655.80

0.40%

6.10%

The earnings: Lennar, McCormick, Paychex and Best Buy
This is a light week for earnings, but pay attention. They will help answer if there's a housing recovery, if retailers still have some fight in them, and if some one-time darlings can offer hope.

MondayLions Gate Entertainment (LGF) will know if "The Hunger Games" was a monster at the box office. The stock is up 74% this year. So investors are bullish. Jim Cramer thinks a box office take of $120 million or less is a sell signal.

Tuesday: Homebuilder Lennar, McCormick (MKC) and drug-store chain Walgreen. Lennar's report took a lot more importance Friday after KB Home (KBH) reported an 8% order decline and new-home sales came in lower than expected. The question KB Home raised is if all the builder talk about weekend traffic in subdivisions and renewed buyer interest is just talk.

Wednesday: Fertilizer maker Mosaic and payroll processor Paychex (PAYX). Mosaic is about the health of agriculture. Corn has been holding steady. Paychex is about employment growth.

Thursday: Best Buy and Research In Motion (RIMM). Electronics retailer Best Buy has been trying to reposition itself, and investors seem to be buying its efforts. Shares are up 17% this year. RIM is a basket case. It sells lots of BlackBerry devices and falls further and further behind Apple's iPhone and phones built on Google's (GOOG) Android system.

Friday: Athletic footwear retailer Finish Line (FINL). If results from Shoe Carnival (SCVL) are any indicator, Finish Line should have decent results. Shoe Carnival's results were so good the stock jumped 25%.

The economy: More housing, consumer confidence, Chicago PMI
The week's economic reports have the potential to move markets.

Pending home sales: Due Monday from the National Association of Realtors. Existing-home sales for February weren't as robust as hoped. Pending sales will help define the question of whether a mild winter simply distorted matters.

S&P/Case-Shiller Home Price Index: Due Tuesday. This should show prices falling in 20 markets as the rate of decline continues downward.

Consumer Confidence for March: Due Tuesday from The Conference Board. So far the betting is that a healthy stock market and an improving jobs picture will offset rising gasoline prices.

Durable-goods orders: Due Wednesday from the Commerce Department. Look for a gain because of more orders for commercial aircraft and machinery.

Initial jobless claims: Due Thursday from the Labor Department. The most recent week showed the lowest level of claims since March 2008. Economists see more improvement.

Gross Domestic Product, third revision: Due Thursday from the Commerce Department. Economists see the report showing the fourth quarter of 2011 was stronger than thought.

Chicago Purchasing Managers Index: Due from Friday from the Institute for Supply Management Chicago. This is closely watched and may show a small dip.

Personal Income for February: This should show a gain because of the mild winter and improved jobs picture.

University of Michigan Consumer Sentiment Index: Like The Conference Board's measure, this should show that more jobs will trump gas prices.

87Comments
Mar 24, 2012 6:50PM
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                            IT'S JUST THE WAY IT IS

 

Over five thousand years ago, Moses said to the children of Israel ,
"Pick up your shovels, mount your asses and camels, and I will lead you
to the Promised Land."
Nearly 75 years ago, (when Welfare was introduced) Roosevelt said, "Lay
down your shovels, sit on your asses, and light up a Camel, this is the
Promised Land."
Today, Congress has stolen your shovel, taxed your asses, raised the
price of Camels and mortgaged the Promised Land!
I was so depressed last night thinking about Health Care Plans, the
economy, the wars, lost jobs, savings, Social Security, retirement
funds, etc ....
I called a Suicide Hotline.
I had to press 1 for English.
I was connected to a call center in Pakistan. I told them I was
suicidal.
They got excited and asked if I could drive a truck......
Folks, we're screwed.

Mar 23, 2012 9:52PM
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My bet is the market ticks slightly up for the week after profit taking this week. Don't want to scare the suckers off you know.
      Meanwhile MSN will come up with some huge racially divisive story to divert attention any from the Obama administration while they try to figure a way out of the mess they've gotten themselves into with Eric Holder and now John Corzine who should both be in jail with half of Congress.

Mar 23, 2012 10:30PM
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THE STOCK MARKET IS NO LONGER A FREE ENTERPRISE SYSTEM BASED ON FINANCIAL FACTS!  IT IS A GAMBLING MARKET BASED ON SPECULATION AND MEDIA DRIVEN BS! HEY, IF YOU CAN AFFORD TO LOOSE YOUR INVESTMENTS, HAVE FUN...YOU MAY GAIN IN THE LONG RUN. FOR MOST OF US MIDDLE CLASS AMERICANS, WE CANNOT AFFORD TO LOSE OUR RETIREMENT  AND MUST FIND INVESTMENTS THAT ARE REAL INVESTMENTS...NOT SPECULATION PERFORMANCE!!!
Mar 26, 2012 4:17AM
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I dont know about MOJO....but the stock market has certainly lost its reputation with the general public.....I dont even think about buying stocks anymore and most people that I talk to are pretty much turned off on the market and those who deal in it ....If the wheeler dealers can keep BSing the institutional and retirement fund buyers, I guess they can stay in business....but forget the average Joe....He has seen your stripes and they look a lot like a snake in the grass.... Maybe the brokers can forget about making a living selling stocks and start selling what peng antony is selling....is it so different??
Mar 24, 2012 7:16AM
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u know the market is only UP from the TRILLIONS that the gov. has handed out...
and we know it hasn't been paid back....
so, where's the growth from?
$4 gal gas,
8.3% unemployment
U.S. drowning in debt
2% growth
home values down 65% and still falling...

looks like a good short to me...
Mar 25, 2012 5:03PM
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Dough boy,

 

I don't know that much about pimples, however it may be worthwhile to note that every major downturn in the American economy for the past 40 years has been preceded by an energy shock. Crude prices (being in a somewhat stable range) have lulled Wall St. into complacency. The crude oil price isn't reflecting the gas price at the pump as well as it used to. Thus because American drivers and foreign drivers are bidding on the same gallons of gasoline we are facing a de facto energy shock as we speak.

 

It might be wise to use some caution here. When the big boys finally get a look outside their insular bubbles and catch on, you might not be able to get out of the way without getting bitten.

Mar 23, 2012 10:16PM
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The media said the same exact things last year at this time that we are hearing and reading today: jobs is better, interest rates are low, profits are up and confidence is rising. What we never hear or read is the corruption of the Fed interacting on the marketplace, the change in rules which allow the banking industry to hide losses, that companies use to a la Enron and all the SPE cloud the issues of exactly what is their true economic health. Don't hint! Risk your job and call a spade a spade! JFL 
Mar 24, 2012 12:44PM
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I for one will be laughing in 5 years if Obama is reelected and we are in the middle of a great depression, with 22 billion in debt, and 10% inflation and unemployment above 9%.  Obama's malaise will be the end of the Donkey party and their Marxist policies.

 

You cannot Tax, Spend, Borrow and Debase your way to prosperity, no matter what "57 states" and his socialist minions tell you...

 

Nobama in 2012...  But if you are dumb enough to re-elect this corrupt machine politico, remember this, YOU got what you voted for... 

Mar 23, 2012 10:49PM
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The stock market is a joke. It's rigged to benefit the investment banks, insider trading is common, speculation is rampant and the small investor doesn't have a chance. It is no longer a trusted institution. Only a fool would trust these people to have his best interests in mind. Maximum short term profits at the expense of the long term viability of our economy is the name of the game.
Mar 25, 2012 4:51PM
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A healthy Sock Market ? Who are these idiots kidding !!  Sell Sell  Take your money and RUN !!
Mar 24, 2012 12:44AM
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it is all artificial! Problem I have and millions like me we have a fair amount invested  in mutual funds through our retirement , defined contribution plans. We started years ago and now the game has changed so we are somewhat stuck untill we retire or get to 591/2.

You can stick a fork in today's mutual funds and especially any kind of buy and hold senario.

The Market today is a flipping "casino". Try moving "mutal funds" on a short term basis--it is like walking an elephant through a obstacle course for dog training class!

Try using past fudamentlist or technological approachs to picking stocks and WTF!!

Read the carp that comes out weekly from the Dept of Labor of Burea of Labor Stats and tell me if you can understand it-The garbage coming out of this administration if it is spun anymone it will turn into butter!

Mar 23, 2012 11:27PM
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No longer does american middle class have a pension at work.  If anyone is going to retire with something more than a social security  check, they must invest a good portion of their paycheck in the Stock or bond market.

 

Pick your posion, but right now, interest rates are low, and the stock market is gaining. In 20 years, either you were sucessful in investing in the market, or your broke....good luck.

 

Mar 24, 2012 12:24AM
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  Theres plenty of room in hell.

 So many people with the wrong prioritys,thats what got us where were at.  Look around,evil surrounds all of us.

Mar 24, 2012 9:51PM
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Due Tuesday from The Conference Board. So far the betting is that a healthy stock market and an improving jobs picture will offset rising gasoline prices.

Gotta love this comedy board, looks like Charlie's finally fallen off the deep end. Unemployment figures are as reliable as the GDP figures that get revised up and down 4 times over half a year before they get them right.

     You can count on them like the Dems coming up with a budget.

Mar 26, 2012 7:55AM
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That gold is the collateral for that worthless piece of paper called the dollar bill....you know the WORLD currency!

No, no it's not.  I don't think I can come here any more.  If these people don't even understand that the US Dollar is backed by the full faith and credit of the US Government, then it's not worth my time trying to educate these dolts.

Mar 25, 2012 3:51PM
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Until the price of oil (gasoline) comes down, any little pimple that comes along, investors want to squeeze the puss out of the market.
Mar 25, 2012 1:55PM
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To all "useful Idiots",

 

Please think about where your "progressive" policies ultimately lead. They will not end until they reach their conclusion. Each step on the road to serfdom has already been taken by others and we are no different. The path is actually well worn, and the trails end is not the happy utopia that you may think.

 

To see where you are actually going, you ought to take a little of your time to research your destination. It is a big help to know where your going rather than to aimlessly follow the whim of the moment. Please watch "A Soviet Story" by the filmmaker E. Snore. You can watch it on youtube. If by some chance you think that we are immune to this destiny...then think again, because we are not.

Mar 24, 2012 7:47PM
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TAZ,

Relax dude. Don't let the swine get to you. The House of Representatives is supposed to be closest to the will of the people. The people have been asking congress for "free stuff" for a long time now. Not realizing that there is no such thing as "free stuff" and eventually the government teat will run dry, leaving those dependent on it to waste away in the refuse heap.

Mar 26, 2012 9:18AM
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Still waiting for all the positive news on Wall Street to translate into positive news on Main Street.

We need to stabilize costs of energy and food for the average person. Inflation caused by quantitative easing (printing more money) may have helped those at the top end of the financial world but has done nothing to relieve the stress for the rest of us. Our wages are stagnant at best while the cost of living continues to rise on a daily basis.  

Mar 26, 2012 6:50AM
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"MAY" have lost it's mojo? How many times does one stick their hand in a financial fire before they realize they will get burned? Better odds of winning at the casino....Thumbs down

 

No thanks, I'll invest my hard-earned somewhere else from now on.

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