Surprise, surprise! Stocks finish near the flat line Friday, but S&P 500 (SPX) still finding resistance at 1,500.  The Dow (DJI) closed the session with a gain of 12.85 points to 10,624.69. The S&P 500 (SPX) was flat at 1,149.99 with the Nasdaq (COMP) down just 0.80 points to 2,367.66. Volume was light once again at 1.05 billion shares on the NYSE and 2.05 billion shares on the Naz. Market breadth was mixed by a 17-to-14 and 12-to-15 margin on the Big Board and Naz respectively.

The hope going into Friday’s session was that economic data would provide incentive for traders. However, mixed results didn’t go the job and anemic trading remained. The SPX is at resistance at 1,500, which might be tough to break until some more significant news is released. Of course, traders would mostly like to see an improvement in the jobs market. The FOMC meeting next week could be a market mover, but this could create selling if the Fed hints at rate hikes in the near term.

Friday got off to a good start when February retail sales were stronger than expected. Sales rose 0.3 percent, above forecasts for a decline of 0.2 percent. Sales less autos were up 0.8 percent when a flat reading was anticipated. This report continues to show that consumers are spending despite concerns about the jobs market and weakness in housing. The Retail HOLDRs (RTH) gained 0.46 percent on the session to $98.79 with the security hitting a 52-week high intraday at $99.

Consumer sentiment showed a surprising drop in early March with the University of Michigan index down to 72.5 from 73.6. Economists were looking for a gain to 74.0, although the year on year rise was still solid, up 15.2 points. The expectations component of the report was the weakest and this component is considered a leading indicator. Inflation expectations remained moderate at 2.8 percent for the one year outlook.

Financial shares have seen strength all week, but gave back some of these gains Friday. Citigroup (C) shares gained more than 13 percent on the week, despite losing 5.02 percent on Friday. The company benefited from positive analyst comments and a successful preferred offering. Bank stocks also saw gains on the week thanks to rumors of mergers and talk of a ban on short selling for banks owned by the government. Overall, the Financial Select Sector SPDRs (XLF) gained more than 2 percent on the week.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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