The market jumped out of the gate this morning, as Citigroup (C) professed that it operated at a profit in the first two months of 2009. The financials stocks quickly rallied and continued higher throughout the day. There were many double-digit gainers: GS +15.32%; MS +26.46%; JPM +22.64%, WFC +18.46%; PNC +25.3%. Techs were very strong also, with GOOG adding +5.94%, RIMM advancing +10.53%, and AAPL gaining +6.64%. The rallied was broadly based and sustained the whole day. The ultrashorts got hammered!! SKF lost 62.53 points!! FAZ, SRS, EEV, FXP were all down big!
In my Market Forecast this weekend, I said,
"...this market may be looking at a near-term bounce. For the new week, if the market does bounce, it will have to get above the 10-day MA before it can get anywhere. For SPX, it will be about 725 and for Nasdaq, it is around 1350."
I also mentioned in my article last Wednesday the importance of the 700 level in SPX. SPX's monthly chart was just screaming for a relief rally! Isn't it funny how the news seem to follow the charts? The Dow was +379.44 points higher; SPX added +43.07 points; Nasdaq jumped +89.64 points. Let's see how the market closed with regards to those key levels:
XLF (financials) had a huge day, up +14.86%!! XME (metals and mining) was also very strong, gaining +8.77%. USO (oil) gave back some grounds, but, OIH (oil services) bounced +6%. PBW (clean energy) rallied +8%. Techs were led by SOXX (semiconductors), up +8.07%. FXI (Chinese ADRs) did better than +8%.
SPX
SPX gained +43.07 points to close at 719.6. It closed above the 700 level and above its 10-day MA. Its MACD went up.
Nasdaq
Nasdaq added +89.64 points to close at 1358.28, above the 1300 level. It also closed above its 10-day MA. The MACD turned up.
The rally today took SPX and Nasdaq back up above their respective support levels: SPX 700 and Nasdaq 1300. They also closed above their respective 10-day MAs. These are bullish signs. If the market continues higher, the next resistance levels to watch are: SPX 750 and Nasdaq 1400 (about where the 20-day MAs are). Each of the 3 daily MAs (10, 20, and 30) are now resistances that the market indices will have to fight with. So, we'll pay attention to those. We should see some follow-throughs tomorrow morning, and then some fluctuations due to profit-taking, which will invite the some shorts back in, at least for a quick play. Now, some Trading Ideas for tomorrow.
Trading Ideas
The Chinese stock market has been holding up and recovering better than most. As the US stock market starts to bounce, the Chinese ADRs should do well:
BIDU has been so strong in the past week, while the broader market tanked to new lows. BIDU penetrated through the resistance at $160 today and could easily go to $180 from here.
SOHU had a very positive quarterly report but had a hard time breaking above the resistance at $50. I think it'll go above that level this time.
ACH jumped more than +10% today and closed above its daily MAs. It is looking very bullish. As commodity-related sectors get stronger, ACH should do well.
CEO finished +11.45% higher today. Chinese oil stocks traded in a tight range recently. For CEO, the range has been $80-$100. CEO closed at $89.25. It could test that $100 level on this run, especially if the energy sectors continue to bounce.
Good night and HappyTrading! ™
