Despite more lousy news in the housing sector, stocks had a strong day with the Dow Jones Industrial Average up triple digits for the first time in weeks. Was bad news being treated favorably or are we more focused on foreign than domestic markets? Or perhaps the focus is on something entirely different.
The Nasdaq led the other major indices yesterday with a pop of 1.37%, which thrust it through its resistance at 2,802, its 50-day moving average, and the resistance line of the bullish flag. Moving Average Convergence/Divergence (MACD) flashed a strong buy signal, and with it momentum has shifted to the upside.
Despite the strong move up yesterday, however, the major indices are not quite out of the woods. The overhead at 2,800 to 2,900 that accumulated in late April and May will no doubt slow future advances. Nevertheless, yesterday's across-the-board rally with gains of 3-to-1 on the NYSE and Nasdaq is a very positive occurrence, especially in the face of grim domestic economic news.
The U.S. dollar was lower again yesterday, and that pushed almost all commodities higher. The PowerShares DB Commodity Index (NYSE: DBC ) was higher for the fifth straight day, driving through its 20-day moving average (green line) and confirming last week's reversal from the double-bottom support line at just over $28 (red dash line.) The importance of this reversal can't be overstated since a penetration of it could have led to an attack on the 200-day moving average and a turn down of the entire futures complex. Note the powerful MACD buy, which occurred at the lowest point in over 16 months (red line curves up and through blue line).
Conclusion: Yesterday's powerful reversal was energized by 1.5 billion shares of stock traded on the NYSE and almost 1 billion traded on the Nasdaq. This was the highest volume in weeks and could even send the bears back to their dens for the summer.
For an ETF to play the commodities boom, see the Trade of the Day .
Today's Trading Landscape
To see a list of the companies reporting earnings today, click here .
For a list of this week's economic reports due out, click here .