Stocks Surge on Possible OPEC Deal, But Doubts Remain

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U.S. equities surged higher on Wednesday thanks to reports OPEC officials had reached a real to cut output somewhere between 200k and 700k barrels per day from the 33.2 million pumped in August.

Stocks Surge on Possible OPEC Deal, But Doubts RemainThe Dow Jones Industrial Average gained 0.6%, the S&P 500 gained 0.5%, the Nasdaq Composite gained 0.2%, and the Russell 2000 gained 0.8%.

Although an actual execution of the agreement — and a hammering out of all necessary details — isn’t expected until the official meeting in November, this was seen as a huge step towards bringing the oversupplied global energy market back into balance. And since an OPEC output freeze has been teased, in one form or another, since February there was a collective sigh of relief.

As a result, crude surged 5.3% for its best one-day gain since April.

No surprise that energy stocks led the way higher, up 4.3%. Additionally, BlackBerry Ltd (NASDAQ:BBRY) gained 5.7% after reporting good Q2 earnings. Nike Inc (NYSE:NKE) fell 3.8% on weaker margins and weak guidance. Twitter Inc (NYSE:TWTR) fell 3.2% as skepticism grows surrounding M&A speculation.

Total exchange volume on the NYSE was 910 million shares, 99.8% of the 30-day average. Breadth was positive, with advancers outpacing decliners 3.1 to 1. Nasdaq breadth was less positive, at 1.4 to 1. For the month, the S&P 500 is posting a fractional gain but is up 3.5% for the quarter to date and 6.2% for the year to date.

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Technically, the S&P 500 jumped back over its 50-day moving average but remains within the confines of a three-month consolidation range with resistance near 2,180. The Dow Jones Industrial Average is testing its July breakout from the three-year trading range which featured long-running resistance near 18,000.

The situation looks vulnerable as breadth has rolled over since early September and has yet to recover, with the percentage of S&P 500 stocks in uptrends stuck near 70% vs. the high of 80% seen earlier this year.

Anthony Mirhaydari is founder of the Edge and Edge Pro investment advisory newsletters. A two-week and four-week free trial offer has been extended to InvestorPlace readers.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/09/possible-opec-deal-doubts-remain/.

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