Despite being in the middle of Q4 earnings reports for major U.S. companies, it was not earnings or economic news that dominated the stock markets this week. Instead the focus was on international monetary developments.
Yesterday, following a slow start due to U.S. dollar strength, buyers almost totally ignored an initial jobless claims that was much less than anticipated and paid little attention to a report that showed inflation in China to be lower than expected.
It was not until European Union leaders finally agreed to do “something” in order to rescue Greece from a financial crisis that the market started to go up. And even though the “something” was not spelled out, it was clear that Germany had taken the lead in the salvage effort.
Large-cap stocks, and especially multinational companies, did well, and so did natural resource stocks. Financial stocks were slightly higher as some profit-taking set in following Wednesday’s big bank gains. A lack of enthusiasm for financials accompanied a Financial Times article that said that Gordon Brown of the U.K. had indicated that the leading economies are close to agreeing on a global bank tax.
At the close, the Dow Jones Industrial Average (DJI) was up 106 points to 10,144, the S&P 500 (SPX) gained 10 points to 1,078, and the Nasdaq (NASD) rose 30 points to 2,177.
The NYSE traded under 1.1 billion shares with advancers over decliners by more than 3-to-1. On the Nasdaq, 636 million shares traded with advancers also ahead by more than 3-to-1.
March crude oil gained 75 cents to $75.28 a barrel, and the Energy Select Sector SPDR (XLE) closed at $55.57, up $55.68. April gold was up $16.40 to $1,092.70. The PHLX Gold/Silver Sector Index (XAU) rose 6.13 to 161.50.
What the Markets Are Saying
Public sentiment took a bullish hop last night when the American Association of Individual Investors (AAII) reported that the survey ended Feb. 11 showed bulls had increased to 36.75% from 29.23%. That’s the first increase in the bullish number since Jan. 14. Stocks peaked three days later beginning the first correction in over seven months.
Yesterday’s triple-digit Dow gain put the S&P 500 above the top of the resistance zone from 1,020 to 1,070 by more than 8 points, and forms a small double-top with Tuesday’s intraday high. Major resistance starts at 1,085, which happens to be the beginning of the November-December quadruple-bottom, and 1,097, which is the 20-day moving average.
Tuesday’s rally was notable in that up-volume surpassed down-volume by 5.5-to-1 on the NYSE and 4-to-1 on Nasdaq. But yesterday’s pop to the same number lacked volume, and although breadth was acceptable, neither breadth nor volume came close to Tuesday’s strength.
So the market appears to be telling us that the kitty is getting weaker. Will she revive in the higher atmosphere and turn into a tiger, or will she exhaust herself and be revealed as just another dead cat after all?
Today’s Trading Landscape
Earnings to be reported include: Agilent, Allete, Duke Energy, HCP, Ingersoll-Rand, MFA Mortgage, PepsiAmericas and Ultra Petroleum.
Economic reports due: retail sales, consumer sentiment (the consensus expects 75), business inventories (the consensus expects 0.2%), EIA natural gas report, EIA petroleum status report and Treasury budget.
Late news: China’s central bank raised its key interest rate by 50 basis points and lifted bank reserve requirements.
Ultra Petroleum (UPL) reported earnings of 51 cents vs. a 47-cent estimate.
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