Let us review what transpired on the final two days of last week…which turned out to be the first lower one for the Dow and the S&P 500 after three straight higher ones. Today’s market action will be discussed in full in tomorrow’s market notes.

Thursday and Friday saw eerily similar patterns, with the Dow and S&P ending slightly lower while the Nasdaq ended higher for the 32nd record level this year on Friday. The Dow this year has had only four days with a greater than one percent move in either direction, which is the fewest since back in 1965! No wonder the VIX is so low!

On Thursday, the major indices did what they have been doing so often this year…ending with very small closing changes and off of their worst intraday levels. For instance, the Dow was lower by as much as 145 points at 10:30 AM and managed to claw its way back to finally end with a closing decline of 24 down to 20.919. Same for the other indices as the S&P was lower by as much as 19 before finishing with a closing loss of 5 down to 2394. The Nasdaq finished 13 points down to 6116. It was steadied by another gain in AAPL and NVDA to new highs, the latter on a strong earnings report.

The declines were led by the retailers on the awful earnings from JCP, KSS and M, in addition to IBM which is a complete waste in addition to MSFT. PCLN continued to sag after the almost 100 point beating it took the day before after its earnings as it tried to defend the 1800 level.

Breadth numbers were poor at a 10/18 downside ratio. The VIX got as high as 11 when the market was on its lows and finally ended at 10.60…proving that those historic levels in the 9’s cannot sustain themselves, Thus, the market has to decline somewhat in order to get them away from those levels.

Bond yields ended a little lower at 2.39% for the 10-year Treasury Note and both crude oil and gold built on the previous day’s gains as the former ended at $47.83 a barrel on a steady decline in U.S. inventories these past few weeks.

With 460 companies having reported their first-quarter earnings, the gain so far for the first-quarter has been 14% and 75% of them have beaten the estimates. In addition, 57% have topped revenue projections.

Earnings are starting to wind down and this week the lineup is as follows with retailers becoming more prominent as the reporting period finishes: Tuesday: SPLS, TJX, Dow component HD plus URBN, DKS and RRGB; Wednesday – LB, TGT, AEO and Dow component CSCO; Thursday – ROST, GPS, RL, HIBB, PLCE, MCK, BKE, AMAT, Dow component WMT, plus CRM; Friday – FL, CPB and DE.

Economic reports saw April P.P.I. which rose by 0.5% which was the largest gain since January and weekly jobless claims fell by 2,000 down to 236,000.

Friday gave us more of the same with all of the major indices trading in very narrow ranges despite some what should have been important economic reports. For instance, April C.P.I. rose by only 0.2% while the core rate which excludes food and energy advanced by only 0.1% as wireless services and auto prices declined. April retail sales rose by 0.4% while the so-called “control group” which excludes autos, gas stations, food services and building materials, gained only 0.2%. This is the calculation that is included in G.D.P. numbers, which does not bode so well for the second-quarter. This is why bond yields dropped sharply with the 10-year Treasury Note down to 2.33% as the dollar weakened on these very soft economic numbers. The Euro was up to 1.0928 and the Japanese yen down to 113.2 to the dollar after the greenback had reached a two-week high against it at 114.4.

To no one’s surprise, the retailers were weak again as JWN and JCP took the downside booby prize. As a result of the lower interest rates and weaker dollar, the financials and GE did poorly as well…the latter on a brokerage downgrade.

The Dow just drifted in a lower downside range and ended off by 22 down to 20,896 while the S&P lost 3 down to 2391. The Nasdaq was the only winner as it gained 5 to 6121…its 32nd high mark this year. The strength once again came from AAPL, AMZN, NFLX and NVDA at new all-time highs. Even PCLN steadied after two sharp down days and TSLA also challenged its best ever level.

Breadth numbers were negative at a 15/17 downside ratio and the VIX actually declined a bit on this mostly lower day.  This was the 14th straight day in which the S&P was down by less than 0.5%, the longest such streak since 1995.

Donald M. Selkin

These are excerpts from Don Selkin’s Daily Market Notes, abbreviated and updated with permission from the author. Don Selkin is the Chief Market Strategist at Newbridge Securities Corporation, member FINRA/SIPC and provides the Fair Value analysis for CNBC each morning.  The commentary provided in this Market Letter is intended to provide timely market analysis and should not be considered a research report.  This Market Letter may contain, and is limited to: Discussions of broad based indices; Commentaries on economic, political or market conditions; Technical analyses concerning the demand and supply for a sector, index or industry based in trading volume and price; Statistical summaries of multiple companies’ financial data, including listings of current ratings; and, Recommendations regarding increasing or decreasing holdings in particular industries or securities.  This Market Letter does not make a financial or investment recommendation or otherwise promotes a product or service of the firm.   This Market Letter contains only news, facts, and commentary on information previously reported from a news source believed to be accurate and reliable by the author.  These news sources include the following: Bloomberg Financial, Reuters, and the Associated Press.