So was Friday a one-day drop in reaction to the disappointing U.S. jobs numbers or the start of something worse?

On Friday as I cruised through my list of stocks that I’d like to buy or where I’d add to existing positions if the price is right, I kept coming to this conclusion: After a bad week, a large number of the stocks I find attractive are still hanging significantly above their 200-day moving average. To me that argues that the U.S. market hasn’t yet broken the upward trend that dates back to the November 25 low on the Standard & Poor’s 500 stock index at 1159. The index crossed above its 50-day moving average at the end of December, signaling an extended rally. Recently, since the beginning of April really, the index has been bouncing around that level, making the chart a pretty good summary of how uncertain this market has become.

But it hadn’t decisively tumbled through that 50-day moving average to signal a correction in that rally—until, maybe, Friday, May 4. The decline to 1369 put the index once again below the 50-day moving average at 1387. We’ve been down below the 50-day line to this degree before in April and have bounced back each time. Next week will tell us if we’re finally looking at a break below that support level.

Of course, I’ll be watching that level but the support level that will get even more of my attention is the 200-day moving average at 1277. Read more

Another day, another bounce–but I don’t think we’ve put a new trend–in either direction–in place

Today’s bounce is being attributed to a hike in global economic forecasts by the International Monetary Fund. The IMF raised its forecast for U.S. GDP growth for 2012 to 2.1% from 1.8%. The projections for global growth went to 3.5% for 2012 from 3.3% and to 4.1% for 2013 from 4.0%. Projections for growth in China are 8.2% in 2012 and 8.8% in 2013.

Not every region of the globe was equally fortunate. The IMF projects that EuroZone GDP will contract 0.3% in 2012.

Good news is always welcome—even if it’s only good news about economic projections rather than actual data—but before you start ascribing super powers to the International Monetary Fund (rumors that Christine Lagarde has been cast in the new Avengers movie are completely unfounded, I’m sad to report), you should note that today’s bounce comes after a decline from the April 2 high on the Standard & Poor’s 500 at 1419. The previous bounce from 1359 on April 10 to 1388 on April 12 lasted just three days.

I think the market right now is ruled by extreme nervousness over the possibility of 1) missing the continuation of the 2012 rally or 2) staying too long at the fair and getting caught in a post-rally correction. The extreme volatility in shares of Apple (AAPL) is a good example of this nervousness with $20 a share up day succeeding a $20 down day.

Despite the IMF forecasts, we’re still stuck with the same uncertainty about the Spanish debt crisis and growth rate for China’s economy that we had yesterday.

First quarter earnings season doesn’t officially start until Alcoa (AA) reports on Tuesday, April 10, but I’m already seeing signs that Wall Street analysts are buckling their seatbelts in preparation for a bumpy ride.

The current read is that first quarter 2012 earnings for the stocks in the Standard & Poor’s 500 will come in 0.5% below earnings for the first quarter of 2011. That would be the first year-to-year drop in quarterly earnings since the third quarter of 2009.

There’s no one big culprit to the drop, according to analysts, but rather lots of modest declines adding up to an overall drop. The strong dollar, as a result of the turmoil of the Greek debt crisis, will cut into profit margins. Slower growth in emerging economies such as China will reduce sales. Commodity prices have crept higher, again reducing margins.

Revenue for the S&P 500 stocks is expected to climb by 3.5% from the first quarter of 2011, but profit margins are projected to fall for the first time in two years.

One result of expectations for a blah earnings season is that some companies are jostling for position at the front of the earnings parade so they can get their good news out while investors are still in a mood to notice. JPMorgan Chase (JPM) is always near the first of the big banks to report, but this quarter Wells Fargo (WFC), which usually reports well down the bank schedule, has moved its earnings report up. Now both banks will report earnings before the New York market opens on Friday, April 13. Think maybe Wells Fargo believes it has a good story to tell?

The NASDAQ Composite Index broke 3,000 on Tuesday, March 14, for the first time since 2000. The 11-year high for the index brings back memories of those days in 2000 when the dot.com bubble pushed the technology-laden index to a high of 5,048.62. (The 500 or so technology stocks that trade on the NASDAQ market account for almost 50% of the market-capitalization weighted index.)

But breaking the 3,000 level isn’t either a signal to put the champagne on ice so it will be chilled when it’s time to celebrate the NASDAQ hitting 5,000 or to run in fear yelling “The sky is falling again.”

Truth is, this isn’t your father’s technology sector. We’re not headed to the moon or into the abyss. Which is why even at 3,000 this is a good time to invest in technology stocks. As long as you understand the big differences between the current technology market and that of 2000.

I can think of four major differences. Read more

Can we just go back to the good old days? The days when stocks went up every year? When we all talked “buy and hold?” When a 200-point drop in a day in the Dow Jones Industrial Average was unusual? When the challenge of investing in stocks was finding good, well-managed companies rather than predicting the direction of the dollar or when Greece would default?

Not a chance.

We have, in fact, entered a new era. It’s not the “New Normal” forecast in 2010 and it’s actually even more dangerous than the new “Paranormal” sketched this January by Bill Gross of PIMCO. This era is characterized by extreme swings between radically opposed fears and hopes. We’d better get used to it. Remember 2011? The year before the current rally? That’s the new era in a nutshell, I’m afraid.

And we’d better come up with strategies for investing through this period. The current reality is, after all, the only one we’ve got. I’m going to start this post by depressing all of us with the size of the challenge ahead. And then I’m going to give you five ways to change your investing ways that can, I hope, make this era less painful and more profitable.

Remember the “New Normal?” Read more