Dow Still Bringing Good Tidings

Updated from 4:04 p.m. EST

Stocks finished mixed Friday afternoon, but investors pushed the Dow to a new 19-month closing high for the fourth session in a row and sent the Dow and S&P 500 to their fourth straight weekly gains.

The Dow advanced 30.14 points, or 0.3%, to 10,278.22, the S&P 500 slipped 0.51 points, or 0.1%, to 1088.67, and the Nasdaq Composite lost 5.16 points, or 0.3%, to 1951.02.

The Dow gained 2.4% on the week, the S&P advanced 1.4%, and the Nasdaq rose 0.1%.

Volume on the New York Stock Exchange was 1.59 billion shares, while 1.77 billion shares changed hands on the Nasdaq. Advancers vs. decliners were close to even on both exchanges.

Today also happened to be a quadruple-witching session, when contracts for stock index futures, stock index options, stock options and single-stock futures all expire, which increased market volatility.

"On a quadruple-witching day, early trading is likely to be dominated by the expiration of options contracts," said Ken Tower, chief market strategist at CyberTrader. "Most of this action will take place near the open, and as the day progresses, investors will refocus on normal issues."

"The big issue [going forward] is whether the Nasdaq can break out to new highs and join the S&P and Dow," continued Tower. The recent action "is more indicative of money being shifted between sectors, which is much less bullish than if new money was coming from the sidelines and lifting all stocks."

Other Markets

Markets overseas finished higher. The FTSE 100 in London added 0.3% to 4412, while Germany's Xetra DAX rose 0.7% to 3898. In Asia, Japan's Nikkei gained 1.8% to 10,285, and Hong Kong's Hang Seng improved 1.1% at 12,372.

The 10-year Treasury note fell 1/32, yielding 4.13%. The dollar strengthened slightly against both the Japanese yen and the euro, which is trading at $1.2378, close to an all-time high vs. the U.S. currency.

Santa Claus Rally

This has been a banner year for stocks. Thus far, the Dow is up more than 23%, the S&P 500 has gained about 24% and the Nasdaq is up about 46%. According to market experts, most traders and investors are looking to play it safe as the end of the year nears. Some are worried about an interim correction, while others simply want to secure their first double-digit gains in several years and enjoy the holidays.

The party, however, may not be over for the bulls just yet. "December is generally a very good month historically," said Tower. In fact, "the last week is usually the best; it is called the Santa Claus rally."

Indeed, historically, the holiday season is an overwhelmingly strong period for stocks. The Dow has risen during the final two weeks of December in 17 of the last 23 years. The holiday spirit has been even more bullish for the S&P 500 and the Nasdaq, which have both risen in 19 of the last 23 years. Both the Dow and S&P have benefited again this year, but the Nasdaq has not been in good cheer. So far this month, the Dow is up 5.1% and the S&P is up 2.9%, but the Nasdaq is down 0.5%.

For those worried about a correction, given how far the market has come this year, "the middle of the month would have been the time for a correction," said Tower. After that, "the likelihood of a further advance increases."

"The bull market should roar on, and the correction will likely be postponed," concluded Tower.