The market put together a nice rally again today, and to the glee of the CNBC cheerleaders, pushed the Dow and the S&P 500 above their December highs. The Dow posted a gain of 108 points (+1.0%) to close at 10941, the S&P added 12 points (+1.0%) to 1222 and the Nasdaq lagged yet again (more on that later), tacking on 12 points (+0.6%) to finish at 2071. The Russell 2000 gained 7 points (+1.0%) to 645, and the bond market rallied on the strong job report (yeah, I know, that doesn’t make much sense - you’d think it would go the other way. I have no idea.) pushing the 10-year Treasury yield down to 4.32%.
Market breadth was positive, with good volume on the NYSE, but weak on the Nasdaq. Advances/declines were better than 3 to 1 on the NYSE and 18 to 13 on the Nasdaq, with up/down volume running 3 to 1 on the NYSE and 10 to 7 on the Nasdaq. New highs/lows also showed quite a difference between the exchanges: NYSE - 426/16, Nasdaq 139/47.
Gains were found all across the industries, with steel stocks (+3.8%) leading the way, followed by paper stocks (+3.5%), housing (+3.3%), airlines (+3.0%), gold & silver stocks (+2.8%), chemicals (+2.5%), commodities (+2.2%), REITs (+2.0%), broker/dealers (+1.9%), utilities (+1.8%) and oil services (+1.7%). The only real losing group on the day was the biotechs, which fell 1.2%.
Crude oil prices snuck higher again today to $53.78/barrel. The dollar fell sharply today, with the dollar index dipping 0.9%. That helped gold prices move back up to near $434/ounce.
BMB Commentary: Ok, here’s the scoop. Today we hit new highs on the Dow and S&P, and don’t get me wrong, I’m as happy making money as the next guy. Maybe even happier. But the talking heads on TV and the newspapers are only going to tell you about the new highs, and how the Dow has risen to levels not seen in 3 1/2 years. While all of that is true, keep in mind that the Dow is only 30 stocks, and we’ve mentioned here on BMB that the number of S&P stocks in good shape isn’t nearly as high as it was in December.
The biggest stick in the mud remains the Nasdaq. While the other major indices have moved to fresh highs, the Nasdaq has failed to even break back above its 50-day moving average, and today only gained 0.6% on lackluster volume while the other indices made those new highs. The market needs Nasdaq participation to continue to move higher, and if it doesn’t get it, you’ll see those new highs disappear in short order. Just be aware of what’s happening, and be prepared to deal with things wherever they may go. Keep your head up and your eyes and ears open - and, of course, keep reading BMB!
