Yesterday turned into a day when stocks just couldn’t retreat. All 10 major sectors advanced, led by industrials, materials and health care. But much of the buying had little to do with U.S. economic numbers or earnings, but rather the apparently successful restructuring of Greek debt.
Investors seemed to ignore news from the Labor Department that said the number of workers filing for new unemployment benefits rose by 8,000 last week versus an expected increase of 2,000. Today, the more important monthly employment report will be issued, and forecasts are for an unemployment rate of 8.3% with the addition of 213,000 jobs.
At the close, the Dow Jones Industrial Average gained 71 points at 12,908, the S&P 500 gained 13 points at 1,366, and the Nasdaq rose 35 points to 2,979. Advancers outnumbered decliners on the NYSE by almost 4-to-1 and 2.6-to-1 on the Nasdaq.
Yesterday, I spoke of the good group rotation with one important group and then another taking the lead. As I said, yesterday all 10 of the S&P 500’s major sector closed higher, and even Dow theorists had to be pleased.
The Dow Jones Transportation Average rose 1.4% for a bigger move higher than any other index. Add the transports to your daily watch list along with the previously mentioned PowerShares DB US Dollar Index Bullish Fund (NYSE:UUP), which fell 16 cents yesterday. Both can aid you with your timing.
Other indicators are mixed. The CBOE Volatility Index (VIX) fell back to a complacent 18.01, insiders are on balance sellers, the stochastic flashed a buy signal yesterday, MACD issued a sell signal, and momentum is falling. Our favorite contra-indicator, the AAII Sentiment Survey shows that bullish sentiment fell to a 10-week low at 42.4%. On Feb. 9, the AAII bullish sentiment was 51.64%.
Conclusion: On balance, the market is passively bullish, and so in the absence of heavy selling will probably continue higher. But anyone who isn’t confused by all that we’ve studied really doesn’t know what is going on. Being a cautious bull in technology, financials, banks, building and construction, and gold should continue to pay off (I think).
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.
