On Monday, stocks advanced on mergers and rumors of mergers. But volume was light due to the Yom Kippur holiday.
Affiliated Computer Services (ACS) rose 14% on news that Xerox (XRX) is offering $6.4 billion in cash and stock for the business support company.
American Securities announced that it will acquire GenTek (GETI) for $38 per share; Gen Tek jumped almost 40% on the news.
Johnson & Johnson (JNJ) rose 1.1% after it said that it bought 18.1% of Crucell for $442.8 million, and Abbott Labs (ABT) rose 2.7% after saying that it will buy the pharmaceutical business of Belgium’s Solvay for $7 billion.
Even though the Dow Jones Industrial Average (DJI) and the other major indices rallied, taking back much of the losses of the past three sessions, volume was the lowest it has been in a month.
The Dow rose 124 points to 9,789, the S&P 500 (SPX) gained 19 points to 1,063, and the Nasdaq (NASD) rose 40 points, closing at 2,131.
The NYSE traded 979 million shares with advancers ahead of decliners by 4-to-1. Just 560 million shares traded on Nasdaq, and advancers there were ahead by 3-to-1.
Crude oil (November contract) rose 82 cents to $66.84, and the Energy Select Sector SPDR (XLE) gained 86 cents to $54.42.
December gold rose $2.50 to $994.10, but trading was described as “lethargic” by the Dow Jones newswire, and volume low due to the Yom Kippur holiday. The PHLX Gold/Silver Index (XAU) was up 62 cents to $159.13.
What the Markets Are Saying
There will be some who say that yesterday’s gains were negated by the low volume. But breadth was very positive, and since the market ended above Wednesday’s close, our internal Collins-Bollinger Reversal (CBR) indicator that first flashed on Wednesday has turned to a buy signal on the Dow and the S&P 500. The Nasdaq missed giving a buy signal by a fraction of a point.
>
Dorsey Wright & Associates point out that “crude oil has been derailed in recent months.” They observe that while the continuous commodity index moved to new highs in September, oil stalled at $75 a barrel. (Find out how you can play this trend in oil.)
“This is a negative divergence from the raw material that dominates the production-weighted commodity indices and ETFs,” Dorsey said.
Dorsey runs a PowerShares Commodity Model and recently replaced an oil fund with silver.
I note that all precious metals are still in a strong uptrend and advocate buying or adding to positions on pullbacks.
Today’s Trading Landscape
Earnings to be reported include: Allscripts-Misys Healthcare Solutions (MDRX), Darden Restaurants (DRI), Jabil Circuit (JBL), Landec Corp. (LNDC), Micron Technology (MU), Nike (NKE), OMNOVA Solutions (OMN), Pepsi Bottling Group (PBG) and Thor Industries (THO).
Economic reports due: ICSC Goldman Sachs store sales, Redbook, S&P Case-Shiller home price index, consumer confidence (the consensus expects 57), and State Street investor confidence index.
The old ways of investing don’t work anymore. But trading options founded on scientific principle can and does work in volatile times like these. Learn how to leverage the power of technical analysis to identify the short window when a trade is set to go straight up or down. Get your FREE copy here!
