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Commodity Sectors Rally Higher!

|Includes: BTU, CF, CLF, CNX, GLD, MOS, NTR, NTR, RIO, Terra Industries Inc. (TRA), TSL, X

Stocks rallied today, led once again by the commodity sectors.  As I have been saying for a week now, "The dollar is very strong, but, perhaps needs a breather.  Commodity sectors could see buyers rushing in if the dollar pulls back."  The dollar finally got a meaningful pullback today, sending SPX towards 1100.

Over the long weekend, TRA agreed to be bought by Yara, a Norwegian fertilizer company, for $4.1 billion, which would give TRA's stock a value of $41.1, higher than CF's bid of about $36.  TRA shares flew up +22.38% today to close at $40.69.  This morning, CF gave a strong guidance, as it reported quarterly earnings.  CF is still a takeover target being pursued by AGU.  CF shares added +3.05% while AGU gained +2.44%.  POT pushed higher to close above $113 and MOS rose +2.63%. 

Miners were also strong today as gold rallied above $1117/ounce!  X, which had recently traded below $43, closed back above $51 today.  Coals enticed buyers back in:  CNX +2.31%, CLF +5.01%, BTU +4.45%.  RTP jumped $8.79, or +4.33%.

We locked profits on a couple of trades today, including an overnight double on TSL:
February 16, 2010
07:04 | HappyTrading TSL ($25.65) Sold to Close 02C24 Feb 24 calls, at $1.80 +100%
06:42 | HappyTrading GLD ($109.25) Sold to Close 03C108 Mar 108 calls, at $3.60 +64%

The TSL trade was opened last Friday, just before the long weekend.  Those TSL Feb 24 calls traded as high as $2.35 and closed at $2.15.  Our entry price was $0.9!  The GLD Mar 108 calls were opened early last week.  They traded as high as $3.95 and closed at $3.75.

The Dow was up +169.67 points; SPX added +19.36 points; Nasdaq gained +30.55 points:

XME (metals and mining) added +3.76% while GDX (gold miners) gained +2.21%.  XLE (energy) rose +2.36%.  MOO (agriculture), discussed in Sector Watch, harvested +2.58%.  SOXX (semiconductors), discussed in Sector Watch, led the techs with +2.44%.  USO (oil) pushed higher by +4.08%.  FXI (Chinese ADRs) advanced +1.67%.

SPX

SPX added +19.36 points to close at 1094.87.  It closed above the 1080 level and above its 20-day MA.  The MACD went higher.

Nasdaq

Nasdaq gained +30.66 points to close at 2214.19.  it closed above the 2200 level and above its 20-day MA.  The MACD continued up.

Both SPX and Nasdaq closed above their respectove 20-day MAs.  Their MACDs are also showing newly developed bullish crossovers.  VIX, on the other hand, dropped back down to below 23.  These are bullish signals.  What's also encouraging is that the financials saw some buyers today and that XLF (financials ETF) is now back above $14.  I think we should see some profit-taking tomorrow, especially if SPX goes up to test 1100.  If SPX does hit 1100 tomorrow, we would look to lock in more profits on the long side.  I do not think SPX is ready to go above 1100 just yet.  If the market can keep the altitude and rest for a day or two, SPX should get another chance at 1100 again later this week.

Good night and HappyTrading! ™



Disclosure: positions: none