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Major Averages Continue Retreat While US Dollar Rallies

The major averages ended lower again on Thursday. Declining issues beat advancers by about 5-3 on both the NYSE and the Nasdaq. Volume was reported higher than the prior session total on the NYSE and near the prior day's total on the Nasdaq exchange. The bias remained clearly negative as distributional pressure continued to cause technical damage. New 52-week highs outnumbered new 52-week lows on the NYSE, but on the Nasdaq exchange new lows trumped new highs.

Stock averages and commodity prices dropped sharply today after a disappointing employment report raised concerns that economic growth and demand for fuel will decline. A report on jobless claims set the tone for the day. Initial claims soared by 43,000 to 474,000 in the week ended April 30. It was the highest total for initial jobless claims since August. Meanwhile, the President of the European Central Bank signaled there will be no interest rate hike in Europe in June, as many had expected.

The dollar gained the most against the euro in eight months. A strengthening dollar added to the negative tones in precious metals and other commodities. The price of oil tumbled over $9 per barrel, and closed in New York below $100 for the first time since March 17. Silver extended its biggest slump since 1983. The most active gold contract fell -2.2%.

Transportation stocks' gains kept the major averages from suffering even deeper losses on Thursday. Airlines and truck companies gained on the prospect of lower fuel prices.

The newspaper has described the conditions concerning the M criteria as an "uptrend under pressure" after recent market weakness. This does not mean to run out and sell every stock you own, however, when the market is under pressure, it is not considered the best time to be entering new positions. Pundits have said that valuations are an increasing concern after last week's rally lifted the benchmark S&P 500 Index close to a three-year high. Last week the Nasdaq Composite Index had finally topped its October 2007 high. The S&P Mid-Cap 400 Index and S&P Small-Cap 600 Index both are consolidating after having rallied to all-time highs.

Image: Globe with money © PhotoAlto-SuperStock Recent events have focused investor attention on the energy sector. The political turmoil in the Middle East and North Africa has pushed crude oil to fresh highs as global spare capacity gets dangerously thin. And Japan's Fukushima Daiichi nuclear meltdown has called into question the safety of fission reactors.

Over the past few months, traditional oil and gas stocks have been big performers. But now alternative-energy plays are perking up as it becomes clear that wind energy, solar and natural gas will play a larger role in the energy ecosystem.

President Barack Obama helped things along with a speech outlining ways the country can reduce its dependence on foreign oil. One particular idea, encouraging the use of liquefied and compressed natural gas in cars and trucks, pushed Clean Energy Fuels (CLNE) up more than 11% at one point today. I think the gains are just starting. Here's why.

CLNE provides fueling stations and compressed and liquefied natural gas for fleet vehicle operators. It also sells natural-gas engine conversions and R&D services for natural-gas vehicles. The team at Barclays Capital, led by Vishal Shah, believes the economics for natural-gas-powered vehicles are starting to "become very compelling, especially in the heavy-duty segment, where penetration rates are low and growth potential is significant."

From a political standpoint, there is a lot to like: America has ample domestic resources, the fuel is relatively clean burning, and the technology is mature and easy to manufacture, unlike batteries and fuel cells. As a transportation fuel, natural gas has only a 0.5% penetration rate in North America. Barclays believes that could increase to as much as 5%.

Companies involved with alternative sources like wind turbines and natural-gas vehicles are getting a big lift from Japan's nuclear disaster and soaring oil prices.