Good day! The market posted nice gains last week. Although most of those gains were made early on with a strong gap and trend day Monday with continuation into Tuesday morning, the S&P 500 ($SPX) and Nasdaq Composite ($COMPX) still closed higher on Friday as well.

After a mixed session, the Dow Jones Industrial Average ($DJI) was the only one of the top indices to close lower, but it did so by only a hair, losing 16.61 points, or 0.13%, to close at 12,609.42. On the week as a whole it rose 3.2%. The S&P 500 gained 1.09 points, or 0.08%, and closed at 1,370.40. It gained 4.2% last week. The Nasdaq Composite performed the best, gaining 7.68 points, or 0.33%. It closed at 2,370.98, up 4.9% on the week with technology leading the market. Finally, the Russell 2000 ($RUT) added 0.16 point or 0.02%. It closed at 713.73 on Friday.

There were not a lot of standouts in terms of sector performance on Friday. The leaders were in biotechnology, pharmaceuticals, commodity related equities, and oil services. The AMEX Biotechnology Index, which was the strongest sector, rose 1.82% on Friday. Telecommunications, broker/dealers, banking, and housing related equities were the poorest performers as a whole. The Philadelphia Banking Sector was the weakest, losing 2.22%.

The index futures were trading higher in premarket action on Friday, breaking out of a range around 7:00 am ET. At 8:30 am ET, however, March employment data hit the wires and the futures quickly reclaimed the earlier gains. The Labor Department reported that nonfarm payrolls fell by approximately 80,000 in March. This is the largest decline since March 2003. Economists were expecting payrolls to fall by about 60,000. Adding to the disappointment was a revision lower by 67,000 in January and February payrolls. This was the 4th consecutive monthly loss for private sector payrolls. The economy has lost an estimated 232,000 jobs on the year to date.

The only sectors to add jobs last month were education, government, mining, and food services. Positions in manufacturing dropped by the largest number since July 2003, while General Motors Corp. (GM) reflected losses in the motor-vehicle sector. It fell 4.7% on Friday when word hit that a plan to help auto-parts manufacturer Delphi Corp. (DPHIQ) emerge from bankruptcy fell through.

As payrolls fell, the country's unemployment rate climbed to 5.1% last month. This is the highest it has been in over 2 1/2 years. Federal Reserve Chairman Ben Bernanke had given testimony last Wednesday on the state of the economy, expressing a view that, while a recession was possible throughout the first half of this year, they are expecting things to turn around over the summer. Of course, who really expects the Fed to truly express any negativity as far as the economy is concerned. It appears that the recession which they deem possible is already well underway. Friday's jobs data is going to be factored into this month's upcoming federal funds interest rate decision and has increased speculation of yet another rate cut coming out of this month's two-day meeting on April 30th.

Although the market opened relatively unchanged on Friday despite the weak jobs data, the indices continued to digest the news following the open. The market congested for the first 30 minutes of the day, but then broke lower once again out of 10:00 am ET. It fell sharply for about 15 minutes, but then the momentum began to shift. After retesting the lows on a 2-5 minute time frame the market was able to turn back around. The S&P 500 and Nasdaq Composite had found support from Thursday's morning congestion, while the Dow hit support at Thursday's lows. These levels assisted the market recovery in the second half of the morning on Friday.

The indices were back at the morning highs by 11:30 am ET. At that point they began to pullback a bit off the intraday highs. The 5 minute 20 period simple moving average held as support, as did the 12:00 p.m. ET correction period. A second wave of buying kicked off on the 5 and 15 minute times frames into the early afternoon.

The upside was strong to begin with on Friday afternoon, but within 15 minute the S&Ps and Dow were hitting Thursday's highs. This resistance slowed the ascent, but it stalled for only about 15-20 minutes before the market again began to push to new intraday highs. This push gained momentum briefly into 13:00 ET, but the market was not able to sustain that pace. The market had hit the equal move zone as compared to the late morning rally, but it managed a third early afternoon push to complete a 5 minute trend move into 13:30 ET on the continuation. This move took the indices into equal move resistance on the 15 minute time frame as compared to Thursday's rally and the momentum shift on the 5 minute time frame, opening the door for a late day reversal Friday afternoon.

When the market turned, it did so rather quickly. The 5 minute 20 sma barely stalled the selling and the indices easily moved lower into earlier congestion and 5 minute highs for support at 14:30 ET. The 5 minute 20 sma then served as resistance and the light volume into that level allowed the market to continue lower into the final 30 minutes of trade, reclaiming most of the session's gains before the closing bell. Support once again hit with an equal move. This time it was on a 5 minute time frame on the downside. Each of these measured moves are shown in blue on the 5 and 15 minute time frames and offer very strong levels for both support, as well as resistance, within a trend when a continuation move is underway.

We are heading into the beginning of earnings season this week. Alcoa Inc. (AA), which traditionally kicks off earnings season, annouces after the closing bell on Monday. The indices are favoring a continuation of this relatively sideways congestion zone on th 60 minute charts as the week begins, but the market bias as a whole remains bullish at this point. The 20 day simple moving average in the indices is going to serve as support, but a gradual pullback into that level would be more favorable for continued upside as the month wears on.

Dow Jones Industrial Average ($DJI)


S&P 500 ($SPX)


Nasdaq Composite ($COMPX)


Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.