Sam Collins

We Could Be in for a 10% Correction

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Stocks closed slightly lower Friday on worse-than-expected economic news. In seven of the past eight sessions, the key indices have closed lower. And, for the first time since early July, the Dow Jones Industrial Average (DJI) suffered its second consecutive weekly loss.

The problem on Friday stemmed from the Labor Department's pre-opening report of a decline in September non-farm payrolls and a rise in the unemployment rate to 9.8%.

Although stocks managed to take back most of the initial losses, the major indices closed slightly lower. The Dow was off 0.23%, the S&P 500 (SPX) was down 0.45%, and the Nasdaq (NASD) fell 0.46%. 

But there was good news to offset some of the poor economic data: Invesco (IVZ) rose 5.5% following a Wall Street Journal report that they were the front-runner to buy Morgan Stanley's Van Kampen funds. ConocoPhillips (COP) rose 2.9% following analysts' favorable opinion of the stock, despite the company's announcement that Q3 earnings will be hurt by lower natural gas prices and weak refining profits. And Wynn Resorts (WYNN) gained 3.1% when Moody's said that its rating could be changed from "negative" to "stable" if a proposed offering it manages closes.

At the close, the Dow was off 22 points to 9,488, the S&P 500 fell 5 points to 1,025, and the Nasdaq was off 9 points to 9,488.  

The NYSE traded 1.4 billion shares with decliners outpacing advancers by more than 2-to-1. The Nasdaq had volume of just over 757million shares and decliners were ahead by 5-to-3.

For the week, the Dow fell 1.8%, the S&P 500 was also off 1.8%, and the Nasdaq lost 2%.

On Friday, November crude oil fell 87 cents to $69.95 a barrel, and the Energy Select Sector SPDR (XLE) was down 27 cents to $51.97. Technically the next support for the XLE is at its bullish support line at $51.50. 

December gold rose $3.60 to $1,004.30 an ounce, and the PHLX Gold/Silver Index (XAU) fell 63 cents to $157.17. 

What the Markets Are Saying

Even though Friday ended on a minus, there was enough late buying to take back most of the early losses. The low of the day at S&P 1,019.95 was made within the first five minutes of the opening, resulting in a slight penetration of the 50-day moving average at 1,020.90, but almost exactly on the current bull channel's support line at 1,020.