I'm filling in for James today. The market got a big start to the day thanks to INTC's earnings report last night and JP Morgan's pre-market earnings report. Both were deemed very good and that's all the shorts needed to abandon ship, which they did with abandon. The DOW started off the day with a triple-digit gain and has held it into the early afternoon. The DOW was able to tag 10K (10001.58 at about 1:30 PM).
JP Morgan's (JPM) profits increased, thanks largely to their trading performance. Are we sure we're not supposed to call these companies large hedge funds now? It's amazing that we bail out hedge funds when they blow up their accounts. But I digress. Bulls heard what they wanted to hear and bears heard what they didn't want to hear. The combination caused a big gap up and bullishly the market held those gaps. There may be some chinks showing in the bulls' armor but that's a worry for another day. JPM gapped up and made the day's high at 8:30 AM, right after their earnings announcement. It was all down hill from there so that's not a particularly bullish response (even though it's still up +2.7% this afternoon).
The retail sales numbers out today were also considered bullish even though they dropped in September, down -1.5% following the end of the cash-for-clunkers program. Auto sales, to no one's surprise, were down and by a large -10.4%, the largest decline in four years. This was a larger drop than the +7.3% gain in August. That's one of those unintended consequence things. But excluding auto sales the retail sales number was up +0.5%, which was stronger than the expected +0.3%. Overall I'd say it was a mixed picture and did not have much influence on this morning's already bullish start to the day.
The US dollar dropped a little further (and may be nearing the bottom of its decline) and that helped the metals add a little to their gains, although the daily candle for gold is looking suspiciously like an ending pattern. Gold was trading around $1065 this afternoon. This month's rally in the metals may be nearing an end, especially if the dollar finds a bottom very soon.
Looking over today's sectors shows the strength to be across the board. The only one in the red this afternoon was the utility index (UTY, -0.1%) which is typically a defensive play. There weren't too many playing defense today. The strongest sectors were the broker/dealers (XBD, +3.1%), transports (TRAN, +2.9%) and cyclicals and banks right up there with the leaders.
Citigroup (C) reports tomorrow morning as does Government Sachs (GS). GS received a downgrade yesterday from Meredith Whitney but we can be sure they made a boat load of money in their trading business. Price may already be priced into the banks and the response could be a sell-the-news after today's big gap up without follow through by JPM. Google (GOOG) reports their earnings after the bell tomorrow, as does IBM. Harley Davidson (HOG) and Nokia (NOK) report before the bell tomorrow.
Today's charts generally show some upside potential but with some bearish indications. The trend is up and that's your friend but don't get complacent here.
Chart of the S&P 500:
Chart of the NASDAQ:
Chart of the Dow Industrials:
Chart of the Russell 2000 index:
A quick survey of the OptionInvestor.com play list doesn't reveal anything out of the ordinary. Most stocks have rallied with the broader market.