A rather weak open turned into another positive day in the market, pushing a number of indices further into new-high territory. The Dow and S&P 500 both claimed new relative highs - the Dow finished with a gain of 58 points (+0.5%) to 11210 and the S&P added 6 points (+0.4%) to 1303. The Nasdaq is still playing catch up, but did add 16 points (+0.7%) to 2312. The Russell 2000 claimed another new closing high by gaining 7 points (+0.9%) to 743. The Dow Transports added to its recent string of all-time highs, gaining 2.2% while the Utilities were higher by 0.4%. Bonds gave back much of yesterday’s gains, and pushed rates back up: the 6-month to 4.8%, 2-year to 4.68%, 5-year to 4.69%, 10-year to 4.73% and 30-year to 4.75%.
Market internals were strong, and we saw a nice pickup in volume on the Nasdaq, with a smaller increase on the NYSE. Advance/declines were 21 to 11 on the NYSE and about 3 to 2 on the Nasdaq, with up/down volume 7 to 3 on the NYSE and nearly 4 to 1 on the Nasdaq. A pickup on the new highs list as well, with highs/lows coming in at 258/28 on the NYSE and 184/38 on the Nasdaq.
Again, there were few losers among the industry groups, but not quite as many winners as yesterday. The best were disk drives (+2.5%), paper stocks (+2.1%), networkers (+2.0%), airlines (+1.9%), gold & silver stocks (+1.7%), REITs (+1.7%) and steel stocks (+1.3%).
Energy prices slipped following the morning inventory data release, with crude falling about a buck to $62.08/barrel, gasoline to $1.83/gallon and natural gas to $7.12/mmBTU.
BMB Note: Another good day. So things look better today than they did just a few days ago — but that’s been the problem hasn’t it? The market hasn’t been able to put together any meaningful or lasting moves for nearly 4 months now. A couple of days of good action is nice - but it doesn’t change the big picture a whole lot, especially with volume being as weak as it has been.
That said, the bias certainly is to the upside for the moment, as the S&P and Dow put in new multi-year highs. If the Nasdaq stocks can catch fire, maybe we’ll have something more interesting. Until we see more confirmation, i.e., stocks actually starting to trend better and more volume, we’ll try to keep our feet on the ground. If interest rates continue to climb, and they bounced back pretty strongly today, the move higher in stocks won’t go too far. Remember the principles of intermarket analysis: bonds and stocks usually trend in the same direction, but bonds usually change direction ahead of stocks. Are bonds finally changing direction here? That remains to be seen.
As for now, there are a few groups that continue to show strength: defense, REITs, steel, transports, telecom and the brokers. In addition, the networkers bounced back nice this week and the paper stocks have made a nice move.