On Thursday, a combination of a drop in oil prices, a lower U.S. dollar, lower initial jobless claims, and the highest ISM Services Index reading since 2005, sent stocks blasting to a triple-digit gain.
Daily Stock Market News
Dow: +191 points at 12,258
S&P 500: +23 points at 1,331
Nasdaq: +51 points at 2,799
Volume and Breadth
NYSE: 1.1 billion shares traded; advancers ahead 4.4-to-1
Nasdaq: 525 million shares traded; advancers ahead 3.3-to-1
Futures and Related ETFs
April Crude Oil: -32 cents at $101.91 per barrel; Energy Select Sector SPDR (NYSE: XLE) +$1.33 at $78.84
April Gold: -$21.30 at $1,416.40 per ounce; PHLX Gold/Silver Sector Index (NASDAQ: XAU) -2.23 points at 215.06
What the Markets Are Saying
A day filled with positive news drove the major indices above their 20-day moving averages and resulted in the strongest session in three months. The significance of the move through the 20-day line is that it effectively negates the drive down below the line on Tuesday, and sets the market up for a further advance that would conclusively put the short-term trend back on the bullish side of the ledger.
The big rally also pushed the S&P 500 dramatically up from its 50-day moving average, preserving the record of the 50-day not being violated since the low of August. For that reason, it is now the 50-day moving average that will get the most attention on any future pullback since a violation of it would be a negative.
But yesterday’s big pop left several issues from a technical perspective that have to be resolved before we are able to again wholeheartedly jump onto the bullish side. Even though breadth was at a strong 4.4-to-1 on the NYSE, the on-balance volume was ahead by only 7.6-to-1 on the NYSE, and 6.8-to-1 on Nasdaq, which compares unfavorably with the 10-to-1 and 8-to-1 down days within a recent six-session window.
And while we’re speaking of volume, the six-week history of higher volume on declines than on advances is still intact. Yesterday’s triple-digit gain for the Dow, supported by a meager 1.1 billion shares traded on the NYSE, places doubt on the sustainability of the recovery.
Despite these qualifications, yesterday’s rally was impressive, powered along by a resurgence in the financials and led by the industrial and technology sectors. Michael Ashbaugh of MarketWatch got it right in his comment on yesterday’s action, “Technically speaking, the rule of thumb is that price action trumps all other indicators.” The balance of power has shifted to the bulls.
Today, the focus will be on the non-farm payrolls report, which is issued at 8:30 a.m. Eastern. The consensus is for 180,000, but there was talk yesterday that it could be as high as 255,000 or more. A disappointment in these numbers could quickly reverse yesterday’s strong performance.
For a comeback stock to buy, see the Trade of the Day.
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.
If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.
