The first session of the new year sprang to life as the major indices continued last year’s December breakout with a burst to new 52-week highs. The punch to new highs was broad based, including 27 of the 30 stocks of the Dow Jones Industrial Average (DJI), including the financial, pharmaceutical, technology, energy and materials sectors.
And the S&P 500 (SPX) advanced with all of its sectors in the black.
But it was the Nasdaq (NASD) that led the major indices, rising 1.75% due to the many technology and medical stocks on its list.
Again, though, it was the U.S. dollar’s decline that sparked much of the buying, especially in the energy and commodities-based stocks. The greenback fell 0.4% versus a basket of currencies, while the CRB Commodity Index rose 2.1%.
The early morning burst of buying was in part due to the ISM manufacturing index for December exceeding expectations, coming in at 55.9 versus the expected 54.3. The report followed a weekend speech by Fed Chairman Ben Bernanke in which he indicated that the Fed would continue on its present course of low interest rates.
At the close, the Dow was up 156 points to 10,584, the S&P 500 gained 18 points to 1,134, and the Nasdaq rose 39 points to 2,308.
Volume improved over the anemic holiday sessions with more than 1 billion shares trading on the NYSE, and advancers over decliners by 4-to-1. The Nasdaq traded 558 million shares with advancers also ahead by 4-to-1.
February crude oil jumped to a 15-month high at $81.51 a barrel, up $2.15, and the Energy Select Sector SPDR (XLE) rose $1.80 to $58.81.
Gold (January contract) surged $22.50 to $1,117.70 an ounce due to world political tensions and a higher stock market. The PHLX Gold/Silver Sector Index (XAU) gained $5.77, closing at $174.02.
What the Markets Are Saying
After yesterday’s resounding confirmation of December’s breakout, any remaining bears must be shivering in their dens. Within mere minutes into the first session of 2010, the major indices ploughed through last Thursday’s weak downside reversals to confirm that they were merely the fragments of a some final portfolio cleansings and not the beginning of a significant turn south.
As might be expected, the most impressive performance of the day came from the tech-heavy Nasdaq — and it didn’t disappoint.
Following the nasty looking but low-volume reversal on the last day of the year, anything could have happened, including a gap down to support. But instead of dropping through the hole created by the close at the low of the day on Thursday, the Naz blasted out of the gate with a high-volume gap up that confirmed that the quadruple-top breakout of Dec. 21 was no aberration but, rather, a strong opening confirmation of the continuation of the bull market.
Even though the Nasdaq was the best performer, it wasn’t the only star of the show. Every major index played a strong supporting role with a positive breadth of 4-to-1 to offset the relatively low volume of the session. And even though the remainder of the day was spent in a holding pattern, the bulls made it clear that there is still one major direction to the market, and that is up.
No market ever went up in a straight line, so there will be some backing and filling. Smart traders will use any pullbacks to either add to current holdings or pick up attractive stragglers.
But either way, now is the time to be long U.S. stocks.
Today’s Trading Landscape
Earnings to be reported after the close: AngioDynamics, Landec, Mistras Group, The Mosaic Co., Sonic, Synnex and Team.
Economic reports due: motor vehicle sales (the consensus expects 8.4 million), ICSC-Goldman Sachs store sales, Redbook, factory orders (the consensus expects 0.4%), and pending home sales.
3 Secrets to Quicker, Bigger Global Profits
Learn how to target the next winning global stocks in three easy steps — without the risk. Plus, the best red-hot China stock to buy now. Download your FREE investing guide here.
