Yesterday the broader market rallied off an initial gap down all the way up near a new high, then stalled at the upper layer of daily resistance, where prices later pulled back during the afternoon. Today the S&P 500 joined the NASDAQ in getting to trade (twice over the day) over it’s resistance.
The market as been testing the highs of the bull market run over the last year. Today with financials back in the lead and backed by other major sectors like the transports and retails for most of the day that effort looked healthier. Shares in AIG Insurance (AIG), and Citigroup (C) have been the ‘lowest of the lowest’ when it comes to toxic assets yet recently they have been able to sell off assets and raise cash. C is raising $2 Bln in a new preferred offering at an 8.75% yield. Zion Bancorp (+6.3%), Morgan Stanley (+3.2%) and Wells Fargo (+2 %) took the lead with AIG and C.
Tech was slow to come back up after its pullback compared to other sectors over the last week and had been exhibiting relative weakness. Today that changed and the techs pitched in and rallied too. Cisco Systems (CSCO), made a new product announcement yesterday. Their new CRS-3 router will cost less (about $90K), than the previous CRS-1 model which debuted in 2004, and has the capacity to download every movie ever made in 4 seconds. Not bad for speeding along the information highway.
The S&P 500 closed back in its upper base area, where the NASDAQ has closed above its base for the second day.
The DOW does not get much coverage here due to the small number of stocks that make it up. These are major global companies though and they have yet to get over their resistance level. It’s been struggling within its own base an by noon it had fallen to a loss as the NASDAQ and S&P 500 held on to gains. DIA, the ETF for the DOW stocks ended up 8c to 105.79.
The US dollar opened up flat and traded that way.It probably helped the transports but oddly commodities did not show much relief with gold even falling.
Sam Stovall, Chief Investment Strategist for Standard and Poor’s Equity Research, thinks that, ” ..momentum will carry into 2010, meaning that 12 months from now, the S&P 500 will probably be between 5% and 10% higher.” Stovall sees slow but steady growth. He thinks many investors are hoping for that ‘V’ recovery, but he thinks it will resemble more of a ‘U’ or even elongated ‘U’ with GDP growing under 2%.
The Prime Minister of Greece met with President Obama yesterday. Greece will be raising cash in several different offerings in the US and Europe.
Trade with a plan.