The bulls turned to their closer in the final hour of trading to get back in the win column on Tuesday. Fed Chairman Ben Bernanke gave the the market some good news to go on, but the rally didn’t materialize until late as other headwinds kept things in check. However, after two days of intense bear action the bulls were able to reverse the tables as they rallied instead of fading into the close.
“Big Ben” said he continues to see the U.S. economy improving, although it won’t be as strong as many are hoping for. He also went on to say that a slow economic recovery will keep unemployment rates high and that the Fed wouldn’t wait for them to come down before raising interest rates.
The euro also rebounded yesterday, somewhat, after the overseas markets closed. The currency rose to $1.197 after hitting a four-year low on Monday.
As a result, the Dow enjoyed a triple-digit gain or 123 points, or 1.3%, to finish at 9,939. Microsoft (MSFT, $25.11, down $0.18) and Intel (INTC, $20.18, down $0.13) were 2 of only 4 blue chips that failed to finish in the green.
The S&P 500 was under the 1,050 level for much of the day, but ended with an 11 point pop, or 1.1%, and closed at 1,062. The index found support at the 1,040 level and held but we still see triple-digits on the horizon.
The Nasdaq, however, failed to keep up with its teammates as it fell 3 points, or 0.2%, to settle at 2,170. Tech got hurt after some negative comments that a weaker euro would drag down U.S. corporate profits but the index pared its losses significantly after trading to a low of 2,139.
(Note to self, the Russell 2000 fell 1 point, or 0.1%, to end at 617).
Yesterday’s run was impressive but it wasn’t a “snap-back” rally by any means. We have slowly been building bearish positions over the past couple of weeks and they are off to a great start. If there is a continued rally (which we doubt) then we have stop targets in place to protect profits and limit losses.
The talking heads will tell you that the recent selloff has come too hard, too fast, but they haven’t seen anything yet. We are still looking to add another trade or two, and today we are adding one at the open if we can get a good entry price. We also take a look at BP (BP, $34.68, down $2.08) as your editor-in chief recalls the days of Enron.]]>