Stocks advanced for the third consecutive day on Thursday, putting in the best three-day rally in four months. Almost all of the Brexit losses were overcome in a wild climax to the second quarter.
After being hit hard by the Brexit, the Dow Jones Industrial Average is now up 2.9% year to date, while the S&P 500 is up 2.7%.
Much of the market’s decline earlier this year was due to falling oil prices. But crude finally bottomed in the mid-$20s in February, and the energy sector is up 13% for the year.
Food stocks rallied Thursday as Mondelez International made a bid for Hershey Co (NYSE:HSY), which soared 16.8%. Campbell Soup Company (NYSE:CPB) gained 5.9% and Kellogg Company (NYSE:K) rose 5.3%.
The British pound sterling fell 0.9% against the U.S. dollar to $1.3311 as the Bank of England signaled it may cut interest rates this summer.
At Thursday’s close, the Dow Jones Industrial Average rose 235 points to 17,930, the S&P 500 gained 28 points at 2,099, the Nasdaq jumped 63 points to 4,843, and the Russell 2000 was up 20 points at 1,152.
The NYSE Composite’s primary exchange traded 1.4 billion shares with total volume of 4.6 billion. The Nasdaq crossed 2.1 billion shares. On the Big Board, advancers outpaced decliners by 3.8-to-1, and on the Nasdaq, advancers led by 2.5-to-1. Block trades on the NYSE increased to 6,275 from 5,799 on Wednesday.
Much of the increased volume and block trades was due to institutional traders “evening up” portfolios on the final trading day of Q2.
For the second consecutive month, the S&P 500 has maintained its bullish posture by closing above the 17-month moving average. Since I have never seen this quadruple signal, ending in two months of “Buy” signals, I can only assume this is what it appears to be — confirmation that the secular bull market is intact.
The S&P 500 ended Q2 on several strong notes. It reversed what appeared to be a breakdown, due to Brexit, by closing over the 2,040 line, as well as the 200-day moving average at 2,023 and the 50-day at 2,076. It also closed within a fraction of the next resistance line at 2,100.
Conclusion
The bulls are joyous as the quarter ended with a sound buying spree. Buying volume on the NYSE exceeded selling volume by 9-to-1 for two consecutive days. So, the first half of 2016 ended on firm technical ground.
Small and mid caps also showed strength as they challenge major trendlines. However, their challenge was not as pronounced as with the Dow or S&P 500.
As we enter the second half of the year, the most important technical line remains 2,040 on the S&P 500.
Have a happy Fourth of July.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
