Stocks Two-Month Rally Rolls On

Stock-Markets / Stock Index Trading May 04, 2009 - 05:41 PM GMT

The stock market indices started off the week with a bang. There was a big gap up at the beginning, a very strong follow on rally, a mid-day consolidation, and a strong afternoon thrust especially on the S&P 500. Despite the fact that the Nasdaq 100 trailed, by the end of the day it caught on and they closed at the highs for the day going on both indices as well as the Dow.

Net on the day the Dow was up 214.33 at 8426.74, and the S&P 500 up more than 3 percent at 907.24, up 29.72. The Nasdaq 100 was up 31.34 at 1427.96.

The Philadelphia Semiconductor Index (SOXX) was up 14.12 at 272.31.

Advance-declines were about 6 to 1 positive on New York and 21 to 6 positive on Nasdaq. Up/down volume was about 17 to 1 positive on New York on total volume of less than 1.7 billion. Nasdaq traded over 2 1/2 billion and had a 4 to 1 positive volume ratio.

TheTechTrader.com board was mostly higher, except for the ultrashorts, which got crushed today. Leading the way were the financials. Goldman Saches (GS) was up 7.08 to 134.16, JP Morgan (JPM) 3.30 to 35.79, and Morgan Stanley (MS) 1.20 to 27.02. Hartford Financial Services (HIG) was up 2.02 to 12.15, Wells Fargo (WFC) up 4.64 to 24.25, and Bank of America (BAC) up 1.68 to 10.38 on 576 million shares.

Other stocks of note, Best Buy (BBY) was up 3.18 to 40.38, Apple (AAPL) up 4.83 to 132.07, Research in Motion (RIMM) 2 to 74.30, and SunPower (SPWR) up 3.46 to 30.18 in a strong solar group.

Other junior solars, Energy Conversion Devices (ENER) was up 1.80 to 20.51, Canadian Solar (CSIQ) up 2.21 to 9.07, and SOLR up 78 cents to 8.27.

Agricultural chemical stocks were strong, with Potash (POT) up 5.76 to 96.27, and Mosaic (MOS) up 1.92 to 44.27.

Aluminum Corp. of China (ACH) was up 2.31 to 22, Cree Inc. (CREE) 1.21 to 28.02, and DryShips (DRYS) up 1.20 to 9.48 on 56 million.

Among the ETFs, the iShares MSCI Brazil Index ETF (EWZ) closed at 49.57, up 2.79. The iShares FTSE/Xinhua China 25 Index (FXI) was up 2.89 to 35.16, and the Direxion Financial Bull 3x Shares (FAS) in a very strong financial sector was up 2.10 to 9.92.

The U.S. Oil Fund ETF (USO) gained 94 cents to 30.56.

Coal stocks were also extremely strong, several of which we reviewed in our video analysis this weekend for subscribers. Patriot Coal (PCX) was up 1.76 to 9.44 and James River Coal (JRCC) up 2.53 to 20.95.

On the downside, the UltraShort Financial ProShares (SKF) fell 2.51 to 47.90, the UltraShort Real Estate ProShares (SRS) 3.88 to 21.14, and the FXP down 3.57 to 16.08 along with the Direxion Financial Bear 3x Shares (FAZ) down 2.31 to 6.30 on 320 million shares.

Stepping back and reviewing the hourly chart patterns, the indices gapped up, ran hard, consolidated and then moved higher in the afternoon, closing at the highs for the day going away in a very bullish start to the week and strong extension to the 2-month rally. The rally is now probably getting too far away from the moving average on the hourly charts, and I would expect a potential turnaround Tuesday tomorrow, but until momentum is broken, this rally keep rolling on.

Good trading!

Harry

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