The bulls were a happy bunch Tuesday, and rightly so, as the
Nasdaq Composite flashed its second straight higher-volume gain
and third since December 11. It broke out over a key resistance
level (3,035) as did the S&P 500 (1,438). The market's
bullish performance Tuesday raises the probability of a re-test
of the September 2012 highs.
It's good to see a market that's finally starting to show
signs of accumulation. Who knows what's in store for January, but
for now, it's time to embrace the rally. Institutional buying is
the lifeblood of any sustained market uptrend and we're finally
starting to see signs of it.
Going into Tuesday, plenty of investors had questions about
the underlying strength of the recent rally. For a while, it was
a rally driven more by retail investors rather than institutional
investors. There wasn't much conviction behind the buying and
growth stocks with the potential to lead were showing wishy-washy
price action at best. It was easy to be skeptical with so much
money on the sidelines, unwilling to commit.
But the Nasdaq's action since December 11 shows that big
investors are starting to put some money to work in stocks.
Tuesday's session was also encouraging because of the number of
technical breakouts it served up. Leadership is starting to
broaden out. Names like Amazon.com (Nasdaq:
), Rackspace Hosting (NYSE:
), Goldman Sachs (NYSE:
) and Oracle (Nasdaq:
) all cleared key resistance levels in heavy volume.
Amazon gained 2.6 percent to $260.40 on volume of nearly 5
million shares. It normally trades about 3.5 million shares a
day. Rackspace Hosting vaulted 5.7 percent to $72.44. Volume
totaled 3.6 million shares, nicely above its average volume of
1.5 million shares. And Goldman Sachs popped 3.5 percent to
$127.77. Institutions fueled its move as well as volume totaled
eight million shares, double its average daily volume of four
After the close, software bellwether Oracle reported
better-than-expected earnings and sales growth. In pre-market
trading, shares exchanged hands around $33.59, up 2.2 percent.
Yesterday, it staged a technical breakout over $32.50.
Meanwhile, home builders are making a case they can provide
additional leadership. Names like M/I Homes (NYSE:
) and Ryland Group (NYSE:
) also broke out this week.
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