4:15 pm ET: What a difference a day makes! The gloom and doom pervading the market yesterday has all but been erased. Stocks and bonds are making nice moves to the upside while on the flip side, commodities--oil especially--are experiencing some profit-taking. Better than expected preliminary economic numbers boosted domestic stocks while evidence of slowdown in other parts of the world caused the hit in materials and commodities.
As mentioned here yesterday, the fact that the Dow Transport Index (DTX) did not move to the downside was an indication of a possible reversal in direction, and it did not disappoint. The fact that the DTX is still advancing and is today's best gainer among the major averages is a strong indication of further upside. Should you wish to play something like the SPY (the S&P 500 index tracking stock) or SPY options to take advantage of a potential rally, please be careful because the non-farm payroll report is due out before the open on Friday. Because employment is crucial to our economic recovery, this number has the potential to move the market.
Going around the globe, the country funds of Thailand (NYSE:TTF) and Hong Kong (NYSEARCA:EWH) are both hitting new yearly highs. On the Hong Kong front, commercial property owner and manager Cheung Kong Holdings (OTC: CHEUY) is breaking out to a new high in concert with its country fund. This company owns and operates over 88 million square feet of commercial space, among other investments. It trades here as an ADR but note that the stock is thinly traded (avg volume = 100k).
In sector news, homebuilding stocks are rebounding strongly (most up 4-5%). These stocks have given up some of their gains recently but that wasn't so unexpected considering how strongly they've been rallying. Airlines stocks also gained lift-off and one has to wonder if this is due to American Airlines saying that it has secured all of its passenger seats. The best advance was seen in the health care sector where biotechs, big pharma, and healthcare equipment and providers all enjoyed across the board gains. The standout in this space is the senior living providers. Those breaking out to new highs today include Capital Senior Living (CSU, +5%), Five Star Quality Care (FVE, +5.5%), Brookdale Senior Living (BKD, +6.1%), and Emeritus Corp (ESC, +8.9%). If you're a member of Gen X or Gen Y, then here's your way of recouping some of the money you'll be shelling out to support the burgeoning retiring baby boomers.
Commodities suffered today. The worst performing group was oil and oil services. Two of the most heavily traded oil etfs (USO, OIL) both broke minor support levels indicating a continuation in downward movement. Many oil service issues broke recent support levels. If you're a holder of any of these oil and oil-related stocks, then taking a defensive position is strongly indicated.
In tech news, Hewlett-Packard (NYSE:HPQ) lowered 2013 guidance which not only tanked the stock but also caused major suffering in the share price of fellow competitor Dell (NASDAQ:DELL). Investors have been running for the exits in both of these issues for some time now and it appears that if these two companies can't revamp their business models (and soon) they, too, will be heading for the exits.
Whew! That's it for now. Many eyes will be focused on tonight's first presidential debate. Whether this event will have any affect on the market is unclear; if it does, let's hope for the best!
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