Dow Jones Scores Big Weekly Gain

The Dow Jones Industrial Average (DIA) had its best week in eight months as it closed with a gain on Friday and finished the week up 3%.

The S&P 500 (SPY) added 2% on the week while the Nasdaq Composite rose 1.7%. The Russell 2000 Index (IWM) gained 2.3% for the week.

Gold (GLD) gave up 4.2% for the week to close at $1327 and oil (USO) fell 1.7% as the situation in Syria continued to de-escalate.

On My Stock Market Radar
In spite of the Dow Jones Industrial Average’s (DIA) impressive climb last week, the index has yet to breach significant resistance levels just ahead.

In the chart above, we can see how the Dow Jones Industrial Average (DIA) has bounced off support at the 14,800 level and now faces stiff resistance at the 15,400 level. The index also approaches overbought levels but recent momentum has been positive.

Fundamental factors are mixed with the wind down of the Syrian conflict being a positive, a mix of economic reports and, of course, the all important upcoming Federal Reserve meeting and the prospect of tapering of quantitative easing on the table.

Most analysts expect the Fed to reduce its asset buying program by $10-15 billion, however, recent weak employment, retail sales and consumer sentiment reports could surprise market participants.

Stock Market News You Can Really Use

In economic news, retail sales advanced 0.2%, a 50% miss of expectations of 0.5%, and the University of Michigan/Reuters consumer sentiment index for September fell to 76.8, also missing expectations.

The Mortgage Bankers Association reported that mortgage applications declined 13.5% for the week of September 6th, off 13.5% from the previous week, and refinancing applications fell 20% to the level last seen in June, 2009.

The refinance index is down 71% from its recent high set the week of May 3, 2013 while the purchase index is still 7% higher than during the same period last year. MBAA

The real estate and home building market has been a main driver of the recovery and now appears to be facing headwinds in the form of rising interest rates.

On the good news front, it appears that a conflict with Syria will be avoided as Russia and the United States agreed over the weekend to a plan to disarm Syria of its chemical weapons by mid-2014 under the auspices of the United Nations.

Next week brings a bevy of economic data but the most important event of the week, by far, comes on Wednesday with the conclusion of the Federal Reserve meeting and Dr. Bernanke’s press conference.

Other items of note:

Monday: September Empire State Index, Industrial Production

Tuesday: consumer price index, home builders’ index

Wednesday, housing starts, Federal Reserve meeting and press conference

Thursday: weekly jobless claims, Philly Fed, existing home sales, leading economic indicators

Bottom line: As usual, this week’s activity will be “all about the Fed, all the time,” and Wednesday is a pivotal moment for global financial markets as the “to taper or not to taper” decision will be announced.

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