It looks like the stock market bulls came back from their three-day weekend rested and ready to run. There are a lot of stories out today but the biggest driving factor for the market's rally seems to be the special election in Massachusetts to fill Senator Kennedy's seat. Polls are currently showing Republican Scott Brown ahead of Democrat Martha Coakley. If Brown wins it will jeopardize the Democrats ability to finish their healthcare reform. In response the healthcare sector is surging with the HMO index up more than 2%.
Asian markets were mixed. Strength in the yen pushed Japanese exporters lower. The NIKKEI lost 0.8%. The Chinese Shanghai index gained 0.3%. The Hong Kong Hang Seng broke a multi-day losing streak with a 1.0% bounce.
Stocks in Europe rallied from their intraday lows to close at new 15-month highs. Healthcare stocks were leading the charge as investors react to the senate race in Massachusetts. In economic news Germany's ZEW Center for European Economic Research said their latest survey of investor expectations for Germany saw a decline. Economist were expecting a dip to 50.0 but the index fell from 50.4 to 47.2. In corporate news the English candy maker Cadbury soared 3.6% on news it recommended shareholders accepted the latest bid by Kraft Foods (KFT) of $19.6 billion for the company. Elsewhere Burberry soared more than 8% on a strong earnings report. Investors are still worried about Greece potentially defaulting on its debt. If Greece falls it could spark a domino effect with Ireland, Italy, Portugal and Spain at risk. The situation is weighing heavily on the euro. At the end of the day the European stock markets were higher. The French CAC-40 rose 0.8%. The German DAX gained 0.98%. The English FTSE rose 0.34%.
As I mentioned earlier the big story today appears to be the senate race in Massachusetts to fill the seat left by Ed Kennedy. The results could have a big impact on the markets tomorrow. In the mean time investors are also reacting to a handful of upgrades. Shares of CIENA Corp (CIEN) are up almost 10% on an upgrade. Dow-component McDonald's (MCD) is up 2% and Xilnix (XLNX) is up 1.4% on analyst upgrades.
Shares of Citigroup (C) are up over 3% and producing what looks like a bullish engulfing (reversal) candlestick following its earnings report this morning. The company reported a fourth-quarter loss that was in-line with analyst expectations at -$0.33 a share or $7.6 billion for the quarter. It was a big improvement from a year ago when C reported a loss of $17.3 billion in Q4 2008. Loan losses were still high but they did contract, which is a bullish sign for Citigroup. Total loan loss reserves remain extremely high at $36.0 billion.
Corporate earnings reports will be the main story of the week outside of the senate race. IBM reports earnings tonight after the closing bell. Wall Street expects IBM to earn $3.47 a share. Morgan Stanley (MS) reports earnings before the bell on January 20th. American Express (AXP), Goldman Sachs (GS), and Google (GOOG) all report earnings on January 21st.
Weakness in the euro is fueling a bounce in the U.S. dollar but commodities are up in spite of the dollar's strength. Gold is up $7.50 to $1,138 an ounce. Crude oil is up about 50 cents near $78.50 a barrel.
Chart of the S&P 500:
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Chart of the Dow Industrials:
Chart of the Russell 2000 index:
We are definitely seeing some movement on the OptionInvestor.com play list. Shares of AAPL are up 4.1% near $214 a share. CAT is up 1.6% unfortunately shares hit our stop loss a $59.45 this morning. UNH is up 2.5% and close to our second target at $36.00.