The week started out poorly, with Wachovia Bank disappointing, and creating fears that the financials would simply fall apart. It didn't happen; Merrill Lynch and Citi reported big writedowns and poor earnings; but they were not dramatically worse than expected, and those stocks rose, along with most other financials.
Outside of that, earnings were good, with strong tech reports from IBM, Intel, Google, and AMD. Industrials like Caterpillar, United Technologies, and Honeywell were also strong.
We saw healthy rotation at the end of the week, with tech and financials stepping up and outperforming the long-dominant energy and material stocks.
Technicals really improved this week:
1) Dow breaks through Feb. high
2) Far more advancing than declining stocks
3) New highs expanding
4) Fear index (VIX) drops to 4-month low
For the week, the Dow, the S&P, the NASDAQ, and the Russell 2000 were all up more than 4 percent.
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