By closing up 7 points, the Dow Jones Industrial Average managed to close higher for the eighth day in a row. And the new high for the Dow is not only the longest run since March, but it also achieved a 30-month high. The focus was on blue chips as Walt Disney (NYSE: DIS) gained 5.3%, and Hewlett-Packard (NYSE: HPQ), 3M (NYSE: MMM), and Travelers (NYSE: TRV) all were up over 1.5%.
Daily Stock Market News
Dow Jones: +7 at 12,240
S&P 500: -4 at 1,321
Nasdaq: -8 at 2,789
Volume & Breadth
NYSE: 958 million, decliners ahead 1.3-to-1
Nasdaq: 515 million, decliners ahead 1.7-to-1
Futures & Related ETFs
March Crude Oil -$0.23 at $86.71; Energy Select Sector SPDR (NYSE: XLE) -$0.93 at $73.37
April Gold +$1.40, settled at $1,365.50; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -$3.51 at $206.29
What The Markets Are Saying
If you read about the stock market’s tape action yesterday from the news services, you would come away with the notion that trading was “listless.” (Briefing.com) And the Wall Street Journal’s headline reported that the Dow merely “ekes out a gain.”
Many stocks did have a listless day, and many small- and mid-cap stocks even gave back some gains as evidenced by the Russell 1000 and 2000 indices closing lower by over .5%. But it was an exciting day for owners of blue-chip stocks.
Both the Dow Industrial and the Transportation averages put on quite a show at the close with the Industrial Average rallying over 55 points in the last hour to preserve its eighth successive gain.
And more important, from a technical viewpoint, the rally in the Transports puts the index in a position to break the series of lower highs and lower lows that has plagued it since mid-January. The Transportation Average closed yesterday just above its 50-day moving average at 5,091 and just a tad under the 20-day moving average at 5,102. And it closed smack on a near-term resistance line connecting the January 18 and 28 highs. In order for it to break the threat of a “non-confirmation” with its cousin, the Dow Industrials, it will have to close above the January 28 high of 5,171, but a plus close today would be another encouraging indication that the overall market is still healthy.
The shift that is sending “smart money” to higher quality issues is a classic case of positive rotation. Earlier this week Nasdaq broke to a new three-year high, and so a minor pullback there and a move to the quality issues is very encouraging. And all index trends remain bullish.
On Capitol Hill yesterday, Fed Chairman Bernanke claimed that the Fed’s Quantitative Easing programs have had nothing to do with inflation in food products, which he outright denied is even occurring. He dismissed worries about inflation saying, “Inflation made here in the U.S. is very, very low.” But he did admit that it is picking up abroad. And yet Treasurys just ended a seven-day losing streak which drove rates higher—usually the result of investors demanding higher yields to offset inflation.
And the chairman also denied that buying back $600 billion in bonds has had any impact on the markets. Perhaps Mr. Bernanke’s speech is just too plain—it’s just not in our interest to understand that a Fed Chairman is in deniability. Looking back at the days of “Greenspeak” when no one knew what Fed Chairman Alan Greenspan was saying warms the heart, “I guess I should warn you, if I turn out to be particularly clear, you’ve probably misunderstood what I’ve said.”
This is clear: Bonds are still in a sell-off while commodity prices are rising, and the smart investors are doing something about it. See our Trade of the Day for a suggestion that could help you offset the rise in food prices.
If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.
