The Market sold off on Friday, ending what had been an impressive run since October 25th, as all of the major indexes close the week lower. The S&P 500 and Russell 2000, the year’s biggest gainers, led the way lower. The S&P fell 14 points, or 1.2%, concluding the week at 1170, still good for a 5.3% gain so far this year. The Russell 2000 fell 9 points, or nearly 1.4%, but is still up 10.1% this year. The NASDAQ lost 15 points, or 0.7%, and is up 3.4% this year. The Dow declined 82 points, or 0.8%, and after nearly 11 months of trading is unchanged for the year.

After a very strong market over the past month, stocks took a breather on Friday, as cautious comments by Alan Greenspan, rising energy prices and an overbought market were blamed for the sharp sell-off. The Volatility Index (VIX), which is often viewed as a contrarian indicator, rose only slightly last week and remains near historical lows. This suggests that sentiment remains at bullish extremes and traders now lean towards some minor corrective action, while the seasonal trends support a year-end rally still possibly in place. As reported last week, if such a rally were to occur, the Semiconductor Index would likely outperform the technology sector and broader market. The SOX (Semiconductor Index) rose nearly 2% last week, despite a failed test of its 200-day moving average on Friday.

What can investors expect this week? On a seasonal basis, the holiday-shortened Thanksgiving Week has been one of the best periods of the year to own stocks. The NASDAQ has posted solid gains in four out of the past five years, with 2000 being the exception. With the trading-shortened day after Thanksgiving typically an extremely strong one for the market, many investors are expecting an up week.

On the earnings front this week, Campbell Soup (CPD) and Krispy Kreme (KKD) report before the market opens on Monday, while Brocade Corporation (BRCD) will report after the close. Tuesday afternoon, Analog Devices (ADI) will report their Q3 results. There are few other corporate events of significance next week and the bond market closes at 2 p.m. on Wednesday. All markets are closed Thursday for the holiday. The stock market closes at 1 p.m. EST, and bond market at 2 p.m. EST on Friday.

Economic releases that will impact the market this week are as follows: Tuesday morning, October Existing Home Sales will be released. Wednesday, October Durable Goods and the final reading of the University of Michigan sentiment index will be reported, as well as October New Home Sales to be released at 10 a.m. Wednesday.

Stay Tuned!