Markets capped off a strong week Friday with the Nasdaq jumping 2.2% and the S&P 500 higher by 1.7%. For the year the Nasdaq maintains its comfortable lead over the S&P 500 by a 5.5 to 2.1% margin. The Nasdaq finished just below the very round 5000 number and has CLOSED above it just 3 times. The index rose 4 out of 5 times this week, and all up sessions finished at or well into the upper range, but volume was nonexistent. The S&P 500 is now hugging the top line in a symmetrical triangle formation and it managed to close above its own round number of 2100. Groups that dominated the new 52 week highs list came from sectors you would like to see, among them medical, retail and software. Merger activity commanded the headlines this week with important groups taking part with FDX bulking up in Europe, perhaps anticipating a move in the once sagging region. The transports will have members reporting earnings next week with CSX, JBHT and DAL all releasing numbers. Healthcare and energy were in the mix and crude advanced 5% this week. We spoke yesterday about the possibility of the risk on trade returning, and the performance in China backs up that thesis. The FXI screamed higher by 11.2%, its first double digit weekly gain since the week ending 10/28/11. Weekly volume was the largest in over a year as well.

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