Stocks continue to build some gains as the Dow Industrials (INDU) 8,195 +4.03% adds 67 points from the 11:00 AM EST hour, with top component gainers having Home Depot (NSYE:HD) $29.95 +10%, JP Morgan (NYSE:JPM) $18.56 +9.95% and Citigroup (NYSE:C) $33.30 +9.86% leading the advance. Dow laggards have Coca Cola (NYSE:KO) $51.80 -1.42%, McDonald's (NYSE:MCD) $17.73 -1.27% and Procter & Gamble (NYSE:PG) $89.83 -1.59% pulling lower at the rear.
The broader S&P 500 Index (SPX.X) 876 +4.12% now challenges its 50-day SMA at 877, bolstered by strength from the financials. All four of the financial groups we follow have the S&P Banks Index (BIX.X) 278 +5.18% (regional banks), KBW Banks Index (BKX.X) 726 +6.69% (multi-national banks), Securities Broker/Dealer (XBD.X) 391 +6.25% and S&P Insurance (IUX.X) 266 +7.01% all showing strong gains.
Shares of Citigroup (NYSE:C) $33.30 +9.86% did trade as high as $34.50, but gave back their best levels after questions were raised after today's release of quarterly earnings. It is not clear, but Keefe Bruyette indicates that they did not include the sale of a Citigroup building at 399 Park Avenue, which yielded a gain of $323 million after tax, in their earnings estimates and the firm is not sure that other analysts did either. If not, Keefe Bruyette then believes that Citigroup may not have beaten the Street's estimates as the sale of the Citigroup-owned building would have accounted for a 6-cents per share addition to the bottom line earnings.
Sector strength is broad with the only losses coming from the more defensive Gold/Silver Index (XAU.X) 60.53 -3.73%. Gainers have the recently pummeled Airline Index (XAL.X) 32.39 +11.26% leading the sector gainers list, while the CBOE Internet Index (INX.X) 67.08 +8%, Fiber Optic (FOP.X) 29.84 +8.6%, Semiconductor Index (SOX.X) 264 +7.5% and Disk Drive (DDX.X) 52.34 +7.9% all show strong rebounds.
After recent bullish % reversals higher in the NASDAQ-100 Bullish % ($BPNDX) and Dow Industrials Bullish % ($BPINDU) from www.stockcharts.com, I've seen enough banking stocks give buy signals today that most likely have the S&P 100 Bullish % ($BPOEX) reversing higher on its bullish % chart with today's action. Just as these three narrow bullish % indicators all reversed lower first in August and September indicating internal weakness, the recent reversals higher in the past two sessions tell us the market internals are beginning to strengthen longer- term. How long it lasts is anybody's guess, but can be easily monitored over time.
Treasuries continue to see a torrid pace of selling as the benchmark 10-year YIELD ($TNX.X) 3.982% jumps higher as this bond's December futures contract (ty02z) falls 1.15% to 113'155, making an extended move lower from Friday's breaking of this bond's 21-day SMA. Near-term technical support for price would be the still trending higher 50-day SMA at 113'08. Today's follow through move below the 21-day SMA is a signal from the bond market that it is getting more aggressive with its selling of the perceived safety of bonds and makes an equity bull's case that asset allocation is taking place toward stocks.
Trading curbs have been in place for the bulk of the session, but volume has reached the 1 billion share mark, which has been just about average volume this time of day.
With the major market indexes up over 4%, it isn't a surprise that breadth is positive with NYSE advancers leading decliners by a 3 to 1 margin, while NASDAQ breadth is equally bullish at 3 to 1. This is off slightly from the 11:00 AM EST hour of 4:1 and may hint that some short-covering is beginning to taper off.
We've also seen some bullishness fade from the new highs/new lows category, which had been even on the NYSE. Currently, 27 stocks have traded new highs versus 40 stocks (11:00 was 26:26) hitting new lows on the NYSE. NASDAQ still trails a bit with 37 stocks hitting new highs versus 67 stocks at new lows (11:00 was 26:44).
Later tonight, Intel (NASDAQ:INTC) $16.21 +7.41%, Motorola (NYSE:MOT) $10.09 -0/09%, Novellus (NASDAQ:NVLS) $25.15 +7.24%, Washington Mutual (NYSE:WM) $32.71 +1.86% report earnings and each could drive sector action tomorrow mornings. As such, trader and investors may assess their account/trade management ahead of tonight's close.