Stocks Closed Mixed On Friday, But Down For The Week

Plus 5 New Strong Buys for Today [Kevin Matras] Profit from the Pros By Kevin Matras Executive Vice President [Zacks Investment Research] Stocks Closed Mixed On Friday, But Down For The Week Image: Bigstock Stocks closed mixed on Friday in a back-and-forth day. After opening higher in the morning, stocks turned lower after noon, before rebounding later in the day with the Dow and the S&P finishing in the plus column. But all of the major indexes finished lower for the week for the second week in a row. The last two weeks were dominated by profit-taking, position squaring, and stock rotation. As of Friday's close, the Dow has pulled back by -4.93%, the S&P by -6.70%, and the Nasdaq by -9.98%. But these types of pullbacks are common. Especially after the record surge we've seen over the previous several weeks and months. Obviously, pullbacks are never fun. But they are a regular part of trading. In fact, stocks usually pull back about -5% roughly 3-4 times per year. (Pullbacks range from -5% to -9.99%.) And they usually pull back -10% on average of about once a year. (A -10% pullback is called a correction. Corrections range from -10% to -19.99%.) So we've all been thru these things time and time again. Just part of the market. The question on everybody's mind right now is, when is it going to stop? Of course, nobody knows. But here's a few observations: 1) The early part of the pullback was sharp, and sudden. Yet on Friday, the market almost seemed to go down gingerly, before quickly snapping back. Does that mean anything? Maybe. And maybe not. But the market seemed exhausted to go down much further – at least on Friday, which means maybe we're a bit oversold. 2) The market also seemed to find support at the 50-day moving average. The Dow came near it before turning back up. The S&P poked through it before turning higher. And while the Nasdaq poked through it and closed beneath it, it was not by much. 3) And lastly, looking at the intraday charts, I can see the beginnings of a bottoming pattern. Depending on which index you look at and which time interval, you can see a nascent falling wedge pattern (which is bullish). That pattern could quickly become void if stocks blow through the bottom. But for now, it does suggest that we could be nearing the end of this pullback. Whether we do or not remains to be seen. But you can be sure that volatility is here to stay for a while. Fortunately, the underlying fundamentals of the economy are looking better and better. And with expectations for unprecedented growth for the remainder of the year, it looks like there's a lot more upside to go for both the economy and the markets. 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