Yesterday the market focused on new data from the Institute for Supply Management, which showed that January factory sector activity had been the best in more than five years. That and some outstanding earnings from key stocks resulted in the first triple-digit day up for the Dow Jones Industrial Average (DJI) since the first trading day of the year.
Stocks moved higher throughout the day, led by materials stocks, which jumped 3.7% with buyers rushing into the gold and silver markets.
Freeport McMoRan (FCX) rose almost 5 points — its best performance in almost six months. But the stock had been grossly oversold after falling one-fifth of its total value in the last seven of eight sessions.
The broad advance was a refreshing pause following January’s 3.5% Dow drubbing. And even though volume was relatively low, buyers drove all of the sectors of the S&P 500 (SPX) higher. And the Dow was led higher by Exxon Mobil (XOM), which reported better-than-expected quarterly results.
But not all of the economic news was good. Construction spending in December made a month-over-month 1.2% decline.
At the close, the Dow was up 118 points to 10,186, the S&P 500 rose 15 points to 1,089, and the Nasdaq (NASD) rose 24 points to 2,171.
The NYSE traded just over 1 billion shares with advancers ahead of decliners by 4-to-1. On the Nasdaq, the ratio of advancers to decliners was 8-to-5, and volume totaled 677 million shares.
Crude oil (March contract) rose $1.54 to $74.43 a barrel, and the Energy Select Sector SPDR (XLE) rose $1.80 to $56.30. February gold gained $21.30 to close at $1,104.30 an ounce. The PHLX Gold/Silver Sector Index (XAU) gained $8.20, closing at $56.13.
What the Markets Are Saying
In just eight trading days, the market has sustained considerable damage, with each major index closing more than 6% lower than its recent high made in mid-January. One of the most visible chart violations was the S&P’s slice through the support at 1,080 to 1,085.
This area now marks the initial resistance zone, and it extends up to the November to December high of 1,120.
Yesterday’s low-volume bounce poked into the resistance, and that is encouraging, but just a first step in reversing what has been a tide of selling. It does not change the overall intermediate trend, which is down.
Near term, there is a tight bear channel that runs from 1,071 to about 1,090, and for anything of bullish significance to occur, the bulls must break that bear channel and punch into the 1,100 area.
The following concerning technical events have all occurred in the past eight sessions:
- The S&P 500 is under its 50-day moving average and in a near-term bear channel.
- With the exception of yesterday, it has been hitting near intraday lows since the breakdown through the 50-day moving average.
- The slope of the 50-day moving average has changed from up to sideways.
Unless by some miracle the “500” reverses and closes above the 50-day moving average, the market is telling us that the intermediate trend is now down and, at the very least, an extended consolidation will likely occur.
Today’s Trading Landscape
Earnings to be reported before the opening include: American Superconductor, AMB Property, Anixter, Archer-Daniels, Art Technology, ArvinMeritor, Automatic Data, BE Aerospace, BP PLC, Corinthian Colleges, Corn Products, Cummins, Dice Holdings, Dow Chemical, DR Horton, Emerson, Entergy, Evercore, Harte-Hanks, Hershey Co., Inergy, Kraft Foods, Landauer, Lexmark, Manpower, Marathon Oil, MarineMax, Melco Crown Entertainment, Overstock.com, Pantry, Patriot Coal, Pentair, Pepsi Bottling Group, Perrigo, Radware, RRSAT Global, Scotts Miracle-Gro, StellarOne, Steris, Suncor Energy, Techne, Thomas & Betts, Tidewater, Timken, Universal Technical Institute, UPS, Whirlpool and Wisconsin Energy.
Earnings to be reported after the close: ACE Limited, Acme Packet, Actuate, AFLAC, AGA Medical, Alliance Data, Arthur J. Gallagher, Atmos Energy, BRE Properties, C.H. Robinson, Ctrip.com, Excel Maritime Carriers, Fiserv, GT Solar, Intevac, International Rectifier, Jack Henry, JDS Uniphase, Jones Lang LaSalle, Kenexa, LaserCard, Manhattan Assoc., Manitowoc, Massey Energy, Merit Medical, MetLife, Millipore, Myriad Genetics, Nalso, NetLogic, News Corp., Pioneer Natural Resources, Quest Software, RadiSys, Riverbed Technology, Silgan Holdings, Simpson Manufacturing, Tesoro, Trimble Navigation, Unum Group, Vascular Solutions, VeriSign, Vocus and Websense.
Economic reports due: motor vehicle sales (the consensus expects 8.37 million), ICSC-Goldman Sachs store sales, Redbook and pending home sale.
Late quarterly earnings news: BP PLC (BP) reported $1.37 vs. a $1.51 est. Corn Products (CPO) reported 74 cents vs. a 67-cent est. Dow Chemical (DOW) reported 18 cents vs. a 12-cent est. Emerson (EMR) reported 56 cents vs. a 42-cent est. Pepsi Bottling Group reported 59 cents vs. a 43-cent est. Patriot Coal (PCX) reported 12 cents vs. a 40-cent est. Thomas & Betts (TNB) reported 70 cents vs. a 63-cent est. Whirlpool (WHR) reported $1.24 vs. a $1.32 est.
Related Articles:
Going Global for World-Class Profits in 2010
Countries such as Brazil, India and China are all forecasting GDP growth that surpasses that of the United States. If you’re not investing to take advantage of this global growth, you could really miss out on potential profits. This special report from CNBC’s Maria Bartiromo shows you the best way to go after world-class profits now. Download your FREE copy here.
