Stock Market Commentary for Friday, April 1, 2005

People blamed Nasdaq's modest 6.44 point decline on rising oil prices, but that's just a silly excuse. Nasdaq lost a little simply due to traditional profit-taking after a significant short-covering rally on Wednesday.

The economic data was reasonably good, although still a little mixed.

One relevant excuse for selling on Thursday (or alternatively that may have limited selling) was to hedge in advance of Friday's big employment report. It's a mixed bag, with unemployment claims up lately (but too late to affect the report whose cut-off date is the 12th of the month), but the Chicago PMI report showing the pace of manufacturing employment at its fastest pace since 1983. How all of this will balance out is anybody's guess, other that to say that the longer-term trend is a gradual drift upwards.

The latest weekly report on mutual fund money flows showed another modest inflow for the ninth consecutive week. These meager flows are not nearly enough to counter significant volatility caused by deep-pocket short-term speculators, but will continue to exert a gradual upwards force on the market over the longer term.

Nasdaq trading volume was moderate (1.84 billion shares), and breadth was slightly negative, with 1.02 losers for each gainer. A modest decline on near-neutral breadth suggests that smaller-cap stocks performed better than larger-cap stocks, which is consistent with the latest weekly report on mutual fund money flows.

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-- Jack Krupansky