Stocks Erase Losses, End Mostly Higher

Stocks counterpunched to a mostly positive finish Friday after a sharp sell-off earlier in the day.

The Nasdaq chugged ahead 0.7%, the S&P 500 0.3% and the Dow 0.1%. The NYSE composite edged down 0.1% but had been down as much as 2.3% earlier.

Volume was up modestly across the board.

Nasdaq 0.3%, the Dow 0.5%, the S&P 500 0.7% and NYSE composite 1.5%.

The indexes opened lower Friday, apparently because of additional negative reports on debt problems in Greece, Portugal and Spain. The release before Friday's open of a mixed U.S. jobs report also didn't help.

On Friday, Portugal, Spain and Greece saw costs for insuring debt rise to record levels, again bolstering the U.S. dollar vs. the euro.

A stronger dollar puts downward pressure on commodities such as steel, oil and gold.

Meanwhile, the U.S. government reported that payrolls dropped by 20,000 in January, which was worse than expected. But the jobless rate eased to 9.7%, better than expected.

The market weighed all this and then sold off rather aggressively.

The sell-off persisted until mid-afternoon. Three factors might've triggered the reversal.

First, a Federal Reserve report said consumer borrowing had dropped far less than expected. This raised hopes that the U.S. consumer might be ready to start spending again.

The second item was the U.S. dollar, which retreated from its high for the day. The third was speculation that Europe might act to solve the debt mess.

Despite Friday's positive reversal, the market remains in a correction. Action throughout the week underlined that reality.

Last week, the market instantly dismissed bullish news. The week included these reports: U.S. manufacturing in January expanded at the fastest pace in five years; productivity beat views and rose for a fourth consecutive quarter; and total holiday retail sales showed the best gain since 2006.

But the market shrugged and let the bears write the script.

Whether the bears are right or not, you should not argue with the market.

Don't buy stocks until a new uptrend is confirmed. While the market's action Friday was encouraging, so far it is just the start of an attempted rally.

Let no gain turn into a loss, even if it's painful to take a small gain rather than the bigger gain you had several weeks ago. Sell every stock that drops 8% below your buy point, no exceptions.

Among industry groups Friday, techs did well as did gold miners, despite the higher dollar. Auto and truck equipment and parts took the hardest hits.