Dow Jones Reclaims 15,000, Drops For Third Straight Week

The Dow Jones Industrial Average (DIA) struggled past the psychologically and technically important 15,000 level but posted another losing week and remains below its 50 day moving average.

On Friday, the Dow Jones Industrial Average (DIA) gained 0.3% while the S&P 500 (SPY) posted a positive week, up 0.5%, and the Nasdaq Composite (QQQ) added 1.5% for the week.

Friday’s big driver for the Dow Jones Industrial Average (DIA) and Nasdaq (QQQ) was the huge pop in Microsoft (Nasdaq:MSFT) which climbed 7.2% after the announcement that Chairman Steve Ballmer was planning to retire within the year.

The S&P 500 (SPY) closed at 1663, just above its closely watched 50 day moving average of 1659.

On My Stock Market Radar

A look at the chart of the Dow Jones Industrial Average (DIA) tells us that the index is rebounding from oversold levels on the RSI grid but remains in a downtrend with negative short term momentum. Friday’s close and late week action shows the index holding at significant support levels in the 14, 900 range and still well above the next support level of 14,500.

Stock Market News You Can Really Use

Last week’s economic reports were mixed with weak new home sales on Friday and a worse than expected weekly unemployment report on Thursday. Positive news came from leading indicators and existing home sales, however, overall enthusiasm for higher stock prices was dampened by the FOMC meeting minutes which indicated growing support for tapering from quantitative easing beginning in September.

The annual Federal Reserve conclave at Jackson Hole is a non-event this year since Fed Chairman Bernanke skipped town, however, investors still looked to speeches there for hopeful signs that quantitative easing would be continued and markets would continue to benefit from easy money.

The news from the Tetons was mixed as Atlanta’s Fed President Dennis Lockhart came down in favor of a September taper while St. Louis Chief James Bullard said there was no hurry to pull the Fed’s easy money punchbowl.

Next week will bring important economic data including:

Monday: July Durable Goods

Tuesday: Case/Shiller home prices, consumer confidence

Wednesday: July Pending Home Sales

Thursday: Q2 GDP revision, weekly jobless claims

Friday: personal income, spending, August Chicago PMI, August University of Michigan consumer sentiment

The most closely watched of these will be the GDP report as investors will try to decide whether good news is good or good news is bad regarding the future of quantitative easing and Fed monetary policy.

Bottom line: Major U.S. financial indexes continued treading mostly sideways this week as the summer doldrums continue. The week ahead is also likely to be a slow, low volume affair as Wall Street players and retail investors adjourn to the beaches, mountains and backyard barbeques to celebrate the last week of summer and the long Labor Day weekend.

However, we can expect a sharp pickup in September when several major issues appear on the horizon, including the “Who Will Replace Bernanke Game,” the September 17-18 Fed meeting, the German Federal election on September 22nd and Congress returning to session with the debt ceiling debate expected to peak in mid to late Fall.

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