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: AMZN ), Rackspace Hosting (NYSE: RAX ), Goldman Sachs (NYSE: GS ) and Oracle (Nasdaq: ORCL ) 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 million shares.
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: MHO ) and Ryland Group (NYSE: RYL ) also broke out this week.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
