The Dow Jones Industrial Average and the S&P 500 closed today near 4 year highs. The Dow continued its climb past 13,000 and the S&P breached 1,400. Financials and Transports led the advance. Other than that it was a rather quiet day. Economic data was a little mixed but generally supports an improving economy. Volume remained on the low side, a fact that some say is a sign of the times and will probably persist.
Futures were positive prior to the announcements of today's economic data and barely changed afterward. Holding steady throughout the morning the market opened marginally higher. After a brief dip below yesterdays close early in the morning stock prices regained the early advance and were approaching multi-year highs by the noon hour. The market was evenly mixed between advancers and decliners in early trading and ended the day with advancers firmly in the lead.
Initial jobless claims were lower than expected. First time claims for the week ending 3/10/2012 fell 14,000 to 351,000. This is a return to four year lows last seen in February. The previous week was revised up from 362,000 to 365,000. The four week moving average remained steady at 355,750 claims per week. Analysts had been expecting 355,000 initial claims.
Continuing Claims fell as well, by 81,000 to a seasonally adjusted 3.343 million.
Total claims for unemployment benefits edged marginally higher. Total claims rose by just over 36,000 to 7.42 million.
Economic data in today's news was positive despite rising producer prices. The Producer Price Index rose by .4% in February, slightly lower than the consensus .5% and hotter than January's .1%. The core number rose by .2% in February, down from .4% in January.
The Empire Manufacturing and the Philadelphia Federal Reserve Survey of Manufacturing both increased in February. Empire Manufacturing increased by nearly a full point to 20.21 from 19.53 in January. The Philadelphia Fed Survey rose to 12.5% from January's 10.2%. These numbers show strengthening manufacturing activity.
Real estate data is mixed but generally positive. Improvements are sluggish but show some big improvements from last year. Mortgage delinquencies were reported up in February but the backlog of foreclosed homes is starting to clear up. New foreclosures are down 2% from January and 8% from February last year. Home repossessions also decreased by 4% from the previous month. Interests rates on 30 year fixed rate mortgages rose less than .1% from last week to 3.92%.
News from across the pond include a warning to England, euro exchange rates, new highs in Greek unemployment and a bond offering in Spain. The UK was warned by credit rating agency Fitch that it could have its AAA rating downgraded in the next few years if it fails to contain public debt. Fitch says that UK has â€œlimited resourcesâ€ to withstand any more financial strains.
The Swiss National Bank left exchange rates unchanged at 1.20 Swiss Francs per Euro. It also left interest rates unchanged and continued to defend an exchange rate floor first introduced last September.
Greek unemployment rose to 20.7%, setting a new all time high. The problem is being intensified by the austerity measures put in place as conditions for continued economic aid. The debt swap deal reached in the last week helped Greece to secure a fresh 130 billion euro bailout. The International Monetary Fund also issued a 28 billion euro facility for Greece. Greece's economy shrank by over 7% in 2011 and 2012 is shaping up to be another year of sharp declines.
Spain sold close to $4 billion in new bonds Thursday. The offering had broad support from investors. The sale will help Spain with its short term obligations and helps ensure the country can live up its own austerity plans. The bonds were issued over several terms. The 2015 maturity bond, with a 4.4% coupon, sold at an average yield of 2.440%.
European markets closed mixed with weak gains for the DAX (+0.77%) and the CAC 40 (+0.31%) and a slight decline for the FTSE (-0.22%).
Providence Resources (PVR-LN), traded on the London stock exchange, found the gold at the end of the rainbow, the Black Gold that is. The oil driller discovered oil off the coast of Ireland with twice the commercial flow rate threshold. The find is in the Ballyhoe Field in the North Celtic Sea Basin. The stock was up 12% in mid day trading. Partner Lansdowne Oil & Gas (LOGP-LN) also traded higher on the news.
Three high profile IPO's happened this morning. Allison Transmission Holdings (ALSN), Demandware (DWRE) and MA-COM Technology Solutions.
Allison Transmission Holdings (ALSN) manufactures automatic transmissions for medium and heavy duty. commercial vehicles. The stock opened at $23, in the middle of its expected range, traded higher for a while and ended the day at $23.22.
Demandware(DWRE), a cloud computing provider, enables clients to design and implement ecommerce websites. The stock was originally priced in the range of $12.50-$14.50 and was thought to open around $16. Demand for Demandware pushed the opening to $25.25, the stock quickly traded lower and ended the day down from the opening at $23.65.
MA-COM Technology Solutions (MTSI) is a provider of high performance analog semiconductor solutions for wireless and wireline applications. The stock opened at $19.10, just over the high of end of its expected range of $17-$19. The stock quickly gained 4%, continued to trade higher and closed the day at $20.79, an 8.8% gain.
PF Chang's (PFCB) was upgraded to hold from sell by Argus. The stock has been trending up since last December from a bottom established summer 2011. The stock is approaching technical resistance around $42.50 on average volume. The restaurant chain is making money but not as much as expected and has an -33% earnings surprise percentage. The technical indicators are also weak.
PF Chang's, daily with support and resistance
Cisco Systems (CSCO) announced the purchase of London Based NDS Group for $5 billion. Analysts argued that the purchase was expensive but potentially a good move for Cisco long term. NDS provides streaming video for multichannel television networks. The move boosts Cisco's presence in video and entertainment. The stock traded down today as much as 2% and closed at $19.91, just above the 30 day moving average. The stock has support around $19 and is trading on average volume.
Cisco Systems, daily with moving average and support
Apple soared to new intraday highs and hit the $600 mark for the first time. This happened just a month after crossing $500. Expectations for the new version of the iPad and iPhones have the stock trading sharply higher for the year, up around 50% for the first 2 1/2 months of 2012. The stock appears to have support around $550, where the most recent round of buying started from. Apple opened the day at $600 and traded down throughout the day. Late afternoon trading brought the stock to close down $4.02 from yesterday at $585.56.
Apple, daily with support and volume
Technology research firm Gartner updated its estimates for global semiconductor revenue growth. The company had previously estimated growth around 2.2% but have raised estimates to 4% for 2012. The DRAM market is expected to see continued increases of sales and price increases which will help drive growth. NAND Flash is also expected to see significant growth in 2012 due to tablet, mobile and mainstream computing. The PHLX Semiconductor Sector index rose by around 2% today to close at 434.99. The index is moving up from support with momentum turning bullish.
SOX, daily with support and MACD
Intel Corporation (INTC), the world's largest producer of semiconductors, gained 1% on the revision. The stock is moving up from the 30 day exponential moving average but is facing resistance at $28 set back during the market decline in 2008. Momentum is bullish and could help the stock break through to the upside.
Intel, daily with resistance and MACD.
Microchip competitor Advanced Micro Devices (AMD) got an upgrade today on top of Gartners revenue revision. Market research firm Jefferies upgraded the stock to buy from hold based on valuation and risk/reward. The company has been gaining market share, especially in the low-end product and mobile devices segments. The stock surged over 6% today and closed at $8.23. The move took the stock above resistance at $8 with bullish momentum and increasing volume.
AMD, weekly with MACD, volume and resistance
The financial sector was strong today and built on gains made earlier in the week. The Financial Sector Spyder (XLF) broke above resistance Tuesday after results of the banking stress tests were released. The stock is making a strong move up from the previous resistance level and the 30 day moving average. The sector gained near 2% today and closed at $15.70. The bounce upward has supporting volume but faces resistance at $16. The top ten holdings of the ETF were up across the board led by Goldman Sachs (GS), Citigroup (C ) and JP Morgan (JPM).
XLF, weekly with support and resistance
Goldman Sachs gained $2.69 today. The stock is breaking above resistance at $120 with a spike in volume.
Goldman Sachs, daily with resistance and volume
Citigroup is making a similar move to Goldman Sachs, breaking out above resistance with high volume. The stock gained over a dollar today to close at $36.23
Citigroup, daily with resistance and volume
JP Morgan gained today as well and is a leader among the big financials. JP Morgan is trending about 20% higher than Citigroup and Goldman Sachs. This stock is also breaking out with increased volume.
JP Morgan, daily with resistance and volume
JP Morgan,compared to Citigroup and Goldman Sachs
Gold rebounded today following yesterday's 3% drop. The precious metal gained $15.80 to close at $1658.70 on the New York Mercantile Exchange. The CBOE Gold Index gained 0.59%, or 1.20 to close at 203.63. The index is at a new 12 month low and sitting on possible support.
CBOE Gold Index, daily with support
Oil prices dropped sharply midday on a faulty report of increased supply. Traders got wind of a possibility that the US and the UK reached an agreement to release oil from strategic reserves in an effort to curb rising prices. The White House quickly denied the report, stating that the topic has been discussed but that no decisions or agreements have been made. The price of crude quickly rebounded to make up the days losses. Natural gas inventories declined but the drop, though at the high end of the expected , was not a surprise. Total storage levels of natural gas remain at seasonal highs and The price remained steady.
30 year bond rates jumped to new highs opening today's trading. The yield declined throughout the session though to end the day only marginally higher.
30 year bond rates
During afternoon trading advancing stocks took the lead and brought the Dow Jones Average and S&P 500 to four year highs. The trend is up on the Dow and S&P. Momentum is bullish in the long term and just turn bullish and getting stronger in the short term. The next significant resistance level for the Dow Jones Index is 14,000. Transports, which gained 3.27%, led the markets in today's trading. Financials are looking strong in the wake of stress test results and helped lead the markets to new highs.
Dow Jones Average, monthly data
Dow Jones Average, daily data
Dow Jones Transports Index
The broader S&P 500 has been trending basically in line with the Dow Blue Chips but is slightly ahead for the year. The index traded higher throughout the day to end near session highs and close above 1,400 for the first time in four years. Both the Dow and the S&P 500 continue to lag the Nasdaq.
S&P 500 compared to the Dow and Nasdaq
S&P 500, trend is up
The Nasdaq also reached new highs today, led by semiconductors and device makers. The trend in this market is up long term and in the short. Strength among tech stocks is gaining support, Gartners revision of semiconductor revenue for 2012 may provide the basis for earnings revisions and positive surprises in the coming quarters for semiconductor makers. Device makers may also fare better than expected if they are going to be using more chips than previously forecast.
Nasdaq, daily data
Nasdaq, weekly data
A look at the Nasdaq index tracking stock, QQQ, shows a small but possibly significant increase in volume over the last three days.
Nasdaq Index Tracking Stock, QQQ
The economy seems to be improving as expected and the markets are responding. Things to look out for include new economic data and earnings. Tomorrow the CPI, Core CPI, Industrial Production, Capacity Utilization and Michigan Sentiment indicator are on tap.