The stock market's gains are fading after a rocky session in spite of generally bullish economic data this morning. The S&P 500 managed to hit a new relative high at 1,037 but traders appear to be taking profits. A few market pundits feel that stocks should have performed better today given the big improvement in the consumer confidence numbers and the improvement in home values. Plus, news that the Obama administration had reappointed Ben Bernanke as Federal Reserve chairman removes a lot of uncertainty regarding leadership for the Fed. Wall Street hates uncertainty so his reappointment should have been bullish news.

Asian markets suffered some profit taking. The Chinese Shanghai index lost 2.5%. The Hong Kong Hang Seng fell 0.49%. The Japanese NIKKEI gave up almost 0.8% following yesterday's sharp 3.3% rally. Across the globe the rally continues in Europe. Most of the major averages closed at new ten-month highs. The English FTSE gained 0.4%. The German DAX rose 0.6%. The French CAC-40 rallied 0.78%.

The New York-based Conference Board released the latest reading on their Consumer Confidence index. The Board surveys 5,000 households on a monthly basis. Economists were expecting confidence to rise to 47.5 in August. Consumer spending accounts for about 70% of the U.S. economy and a nervous consumer doesn't spend as much. That's why consumer confidence is so important. Today's numbers showed a jump from an upwardly revised 47.4 in July to 54.1 in August. The consumer expectation component regarding the next six months rallied from 63.4 to 73.5, which is the highest reading since December 2007. Normally a reading near 90 is associated with a healthy economy and readings over 100 represent strength. We still have a long way to go but August's reading at 54 is a big improvement over February 2009's all-time record low of 25.3. The better than expected consumer confidence number is helping the retail sector with the RLX index up more than 2% this afternoon.

Tuesday also brought the latest monthly reading on the Standard & Poor's/Case-Shiller U.S. National Home Price Index, which measures homes in the top 20 cities. The price index rose 1.4% from the first quarter to the second quarter of 2009. This is the first quarterly increase in three years. The monthly numbers also increased from May to June, marking the second monthly gain in a row. Dallas and Denver were stand outs with a fourth straight monthly increase. The month over month increase is encouraging but some argue it's just a seasonal bounce. Summer is the hottest time of year to sell a home and prices tend to tick higher. Furthermore there has been a rush of first time homebuyers trying to jump in and capture the $8,000 tax credit that expires in November. The Case-Shiller numbers represent improvement but there's a lot of skepticism about whether it's sustainable. The news is certainly helping the homebuilders. The DJUSHB home construction index is up 4% today.

Outside of retail and the homebuilders the biotech stocks are really performing well. The BTK biotech index is up more than 3%. Airlines are also performing well with a 3% gain. Insurance, gambling stocks, and the broker-dealers round out the best sectors today. Oil and energy are the worst performers. The U.S. dollar is down but that's not helping crude oil futures. Oil rallied toward $75.00 a barrel and reversed sharply. Currently oil is off more than $1.80 toward $72.50 a barrel.

Currently the S&P 500 index is up about 5 points at 1,030. The NASDAQ composite is up about 9 points at 2,027. The Dow Industrials are up almost 60 points near 9566. The small cap Russell 2000 index is up just under 5 points at 584.

Let's take a quick look at charts for the major averages:

Chart of the S&P 500:

Chart of the NASDAQ:

Chart of the Dow Industrials:

Chart of the Russell 2000 index:

Scanning the play list for movers I see that GWR, a railroad stock, is showing relative strength up 1.6%. The stock is nearing our first target. IDXX temporarily broke out higher and hit our aggressive trigger to buy calls at $51.75. NEU continues to soar with another 3% rally on strong volume.