The S&P 500 (SPX) finished Friday unchanged at 3,901, states Jon Markman, editor of Strategic Advantage.

The statistical anomaly masked a wild session of volatility in which the benchmark index traded down in the morning by 1% and down 2.9% in the later afternoon. In the end, several waves of short covering ahead of the weekend lifted the index to breakeven.

The rally reveals once again that the only real buyers are bears covering profitable short positions. Bulls remain mostly on the sidelines awaiting more clarity on interest rates and inflation. That imbalance between buyers and sellers is forcing the index lower, plain and simple. Every significant rally has ultimately failed because bulls are a no-show. The only game at this juncture is guessing where bears will cover shorts, and at what level they will reload.

The benchmark has now declined for seven consecutive weeks, the longest losing streak since 2001. Stocks are deeply oversold. A reflexive rally is near, yet bulls will face considerable overhead resistance at 4,080. Critical support for the S&P 500 remains at 3,860 on a closing basis. If that level is lost, the next downside target is 3,728.

The Upshot

The Dow (DOW) also ended Friday slightly higher, at 31,261.90, while the Nasdaq (NDX) fell 0.3% to 11,354.62.

All three indexes ended the week lower, with the S&P 500 down for the seventh consecutive week, at 3.1%. The Dow finished 2.9% lower this week and the Nasdaq slumped 3.8%. A bear market is considered a 20% drop from a recent high. Consumer discretionary and industrials led decliners while health and real estate were the biggest gainers.

Breadth slightly favored decliners four-three, and there were 1,018 new lows vs 41 new highs. Big caps on the new high list included Exxon Mobil (XOM), Suncor (SU), Cenovus Energy (CVE), Sociedad Quimica y Minera De Chile S.A. (SQM), and Aspen Technology (AZPN).

The US ten-year yield dropped by 6.5 basis points to 2.79%, its lowest in May. West Texas Intermediate crude oil futures rose by $1.02 to $113.23 a barrel.

In economic news, state-level data from the BLS showed that the unemployment rate fell in 13 states in April and held steady elsewhere, with ten states hitting their lowest recorded rates. The largest decline was in Maryland, where the rate declined by 0.4 percentage points, followed by 0.3 percentage point declines in Iowa, Maine, and Minnesota. The national unemployment rate held steady at 3.6% in April.

Payrolls rose in 11 states in April, with Texas and Florida posting the largest increases in absolute terms and New Hampshire saw the biggest percentage gain. National nonfarm payrolls rose by 428,000 in April after an identical gain in the previous month.

In other news, the group of seven leading economies pledged $19.8 billion in aid to Kyiv to help defend itself against Russia, which intends to take the Donetsk and Luhansk regions in Ukraine.

In corporate earnings news, Ross Stores (ROST) shares sank 22.5% after the retailer posted lower fiscal first-quarter earnings and sales late Thursday. Credit Suisse and Deutsche Bank were among the investment houses to downgrade the company's share-price target. Palo Alto Networks (PANW) late on Thursday raised full-year guidance as a trend relating to network and cloud transformation and fortifying enterprise infrastructure against security threats boosted demand across its products portfolio. The shares of the cybersecurity firm jumped nearly 10%.

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