A combination of a growing support in Europe for to aid Greece, acceptance of interest rate hikes in China, and better economic numbers yesterday led investors to buy U.S. stocks and commodities futures.
Stocks had their best day since November as buying was strong from the opening to the close. Prior to the opening, the Federal Reserve Bank of New York’s Empire Manufacturing Survey showed that conditions for New York’s manufacturers had improved in February. And a separate study showed that homebuilder confidence also grew.
The U.S. dollar fell sharply against the euro due to the support for Greece and, as a result, gold, oil futures and many other futures had their best day in months. And international banks did well with Barclays (BCS) up $2.35 and JPMorgan Chase (JPM) ahead by $1.12.
At the close, the Dow Jones Industrial Average (DJI) was up 168 points to 10,269, the S&P 500 (SPX) rose 19 points to 1,095, and the Nasdaq (NASD) gained 31 points to close at 2,214.
The NYSE traded just over 1 billion shares with advancers over decliners by 5-to-1. The Nasdaq crossed 590 million shares and advancers led by a ratio of 5-to-2
March crude oil rose $2.88 to $77.01 on the stronger economic news and the EU’s support of Greece. The Energy SPDR (XLE) gained $1.31, closing at $56.90.
April gold rose $29.80 to settle at $1,119.80 an ounce, and the PHLX Gold/Silver Sector Index (XAU) jumped 4.39 to 163.99.
What the Markets Are Saying
Yesterday’s big jump in the major indices validates the key reversal day on Friday, Feb. 5, at S&P 1,045. And with that the near-term trend has turned from down to sideways, telling us that the chances are high that the recent correction of about 9% has finally run its course.
And perhaps just as important, the reversal also forms a complex bottom with the lows of Oct. 2 and Nov. 2 at S&P 1,025 and 1,036, respectively, on the left side of the chart. So even though stocks may run into some difficulty at S&P 1,100 to 1,112, investors can relax just a bit and concentrate on buying the most undervalued high-quality issues without being overly concerned about a massive sell-off.
Tape action with breadth at 5-to-1 and good chart formations all support the view that new highs will be made sometime this year. But the light volume (yesterday just over 1 billion shares on the NYSE) is a major block to an immediate breakout.
The highs of late December and early January were also made on very light volume following months in which stocks meandered through the 2,000 to 2,200 zone of the S&P. Buyers and sellers expended huge amounts of energy in a type of trench warfare that left both sides exhausted, and made buyers unable to cash in on the final breakout.
This year is shaping up as one in which buyers should be more cautious than ever, not overpaying for anything, since chasing stocks at their tops could result in heavy losses.
Instead buyers should wait until minor pullbacks take their favorite names to major support lines and moving averages before committing new capital. This year, timing could be everything.
Today’s Trading Landscape
Earnings to be reported before the opening include: Auxilium Pharmaceuticals, BlueLinx Holdings, Brink’s Home Security Holdings, Brush Engineered Materials, Cimarex Energy, Deere, Devon Energy, Dollar Thrifty Automotive Group, Enzon Pharmaceuticals, Euronet Services, Franklin Electric, Freightcar America, Fundtech, Genzyme, Health Grades, Hecla Mining, Host Hotels, IAMGOLD, Inverness Medical, Ituran Location and Control, JAKKS Pacific, Koppers Holdings, Martha Stewart, NewStar Financial, NICE Systems, OfficeMax, Owens Corning, PF Chang’s, Rimage, Rockwood Holdings, Sinclair Broadcast, Stratasys, The Medicines Co., Vitamin Shoppe, WatsCo and XTO Energy.
Earnings to be reported after the close: 7 Days Group, Advance America Cash, Advance Auto Parts, Agnico-Eagle Mines, Analog Devices, Applied Materials, Avis Budget, CardioNet, Career Education, Celera Genomics, Chesapeake Energy, Cliffs Natural Resources, Cloud Peak Energy, Community Health, Comsys IT Partners, Cyberonics, Denny’s, Duoyuan Printing, Endurance Specialty, FARO Technologies, Federal Realty Investment Trust, Guidance Software, Haverty Furniture, Hewlett-Packard, Innophos Holdings, InterMune, ION Geophysical, iRobot, Itron, Jack in the Box, Key Energy, Kinross Gold, Kite Realty, KongZhong, Las Vegas Sands, LaSalle Hotel, LogMein, Nationwide Health, NCI, NetApp, NightHawk Radiology, Nvidia, Oceaneering International, Odyssey Healthcare, Omeros, O’Reilly Automotive, Orthofix, Peet’s Coffee, Platinum Underwriters, Priceline.com, Questar, Seacor Holdings, Skechers USA, Synopsys, Terex, Trico Marine Services, Trinity Industries, United Online and Vital Images.
Economic reports due: MBA purchase applications, ICSC-Goldman Sachs store sales, housing starts (the consensus expects 580,000), import and export prices, Redbook, industrial production (the consensus expects 0.8% for production and 72.6% for the capacity utilization rate), FOMC minutes and Treasury budget (the consensus expects -$46 billion).
Quarterly earnings news (earnings vs. estimated):
- Cimarex (XEC): $1.23 vs. 99 cents
- Deere & Co.: 57 cents vs. 19 cents
- Dollar Thrifty (DTG): 28 cents vs. 8 cents
- Host Hotels (HST): 19 cents vs. 19 cents
- OfficeMax (OMX) 3 cents vs. 7 cents
- P.F. Chang’s China Bistro (PFCB): 52 cents vs. 40 cents
- Vitamin Shoppe (VSI): 12 cents vs. 8 cents
Related Articles:
3 Cheap, Must-Own Recovery Stocks to Double in 2010
Get the names of the best cheap stocks to rebuild your wealth in 2010. Each stock sells for less than $10 a share and is set to double (even triple!) in the next 12 months. Download your FREE report here.
