U.S. stock markets soared yesterday, boosted by better economic
news from China, a decision by the Bank of England to hold current
rates, positive data from Australia, and a stronger euro. Even
Spain chimed in with a successful bond offering. And there was
positive domestic news in the form of better-than-expected weekly
According to the Wall Street Journal, traders said that, "they
are focused more broadly on global growth, including developments
in other major regions that seem to be suffering little ripple
effect from Europe's struggles."
International companies benefitted from the round of buying,
), up 5.5%, leading the Dow's rush higher.
American Express Company
) gained 5.04%,
) gained 4.77%, and
) rose 4.17%.
Energy stocks were higher yesterday, after being hammered over
the last week.
Anadarko Petroleum Corporation
) rose 12.4%,
Baker Hughes Incorporated
) gained 10.7%, and
Diamond Offshore Drilling, Inc.
) was up 7.4%.
) jumped 12.26%.
The euro rose to 1.21 against the greenback. This was the first
time in over a week that it traded at that level. And the U.S.
Dollar Index fell 1%.
At the close, the
Dow Jones Industrial Average
) jumped 273 points to 10,173, the
) rose 31 points to 1,087, and the
) rose 60, closing at 2,219.
The NYSE traded 1.3 billion shares with advancers topping
decliners by over 5.5-to-1. The Nasdaq crossed 628 million shares
and advancers outnumbered decliners by 5-to-1.
Crude oil for July delivery gained $1.10 at $75.48 a barrel, and
Energy Select Setor SPDR
) gained $2.58, closing at $53.99.
June gold declined $7.70, settling at $1,220.80 an ounce. The
PHLX Gold/Silver Sector Index
) rose $2.57 to $175.
What the Markets Are Saying
After four consecutive days of losses, we should not be
surprised by yesterday's rally from a major support zone that was
marked by double reversals on the Dow Industrials and three
reversals from the S&P 500.
With yesterday's huge pop, our internal indicators gave a volley
of short-term buy signals. However, with the long-term trend
neutral to down, and close to a bearish signal, and both the
intermediate- and short-term trends still down, it's difficult to
get very bullish.
Even though yesterday's reactive rally was supported by strong
breadth, volume was low. We've seen this low upside/strong downside
volume picture since early March, and the overall results speak for
The other troublesome trading pattern is the market's frenetic
reaction to news -- both good and bad. This tells us that stocks
are not held in strong hands, and that the motivation for both
buyers and sellers is fear -- fear to lose on bad news and fear to
miss the move higher on good news.
Unless someone somewhere comes up with a disaster someplace, we
should expect a strong opening with increased buying by
speculators. But the Dow, S&P 500 and Nasdaq are approaching
some formidable resistance in the form of the 20- and 200-day
moving averages, as well as deep zones of sellers. It would take an
extremely optimistic trader to go into the weekend holding
purchases made at Thursday's prices through a weekend of
potentially horrid news.
I'll still wait this out until the technical picture is less
Today's Trading Landscape
There are no significant earnings reports due today.
Economic reports due:
retail sales (the consensus expects 0.4%, 0.2% ex-autos), consumer
sentiment (the consensus expects 74), and business inventories (the
consensus expects 0.5%).
If you have questions or comments for Sam Collins, please
e-mail him at
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