Last week in the equity markets finished on a high note as JP Morgan (NYSE: JPM) announced a smaller than expected trading, or “hedging” loss depending on how you look at it, during their quarterly earnings announcement last Friday morning.
This news, and more notably the absence of “bad” news out of Europe for a change, helped fuel the SPX to a substantial 1.65% gain to finish the week at 1356.78.
Throughout last week prior to Friday, the SPX weakened daily, losing on six consecutive trading sessions before putting in a strong showing to finish out the week. [Stock ETFs Pare Weekly Loss]
JPM, which is the third largest holding in Financial Select Sector SPDR (NYSEArca: XLF) at 7.48%, has now rallied an impressive 18% from its intraday low of $30.58 back in early June. XLF is up 10% since then.
We have mentioned the importance of the Financials sector demonstrating relative strength previously in these recaps, and despite the volatility over the past several months in the sector, XLF is still handily outpacing the broad market as XLF has rallied 13% versus the SPX up 8.16% YTD. A second out-performer has been the Technology sector, as PowerShares QQQ (NasdaqGM: QQQ) has soared 13.51% YTD with its top component AAPL surging 49.38% in 2012.
Technically speaking, our market technician David Chojnacki sees support in the SPX at the 1325 level, which we flirted with on several occasions last week and upside resistance at the 1363-1365 levels. The NDX (Nasdaq 100), of course led by AAPL, closed with a 2584 handle last week, and we expect the index to test 2588 technical resistance in the near term.