9:00am (EST)

The bulls passed a key test on Friday and Monday as they got wins on both days following yesterday’s pop.  The market was flat for much of the morning session although commodities were rebounding following last week’s selloff.  Oil, gold and silver all traded higher despite an early rally in the dollar which eventually closed lower for the day.  There was a little activity in the M&A sector and Energy stocks were strong which provided enough leadership to keep the bears at bay.  

Oil fell below $100 last week but rallied over 5% to close at $102.50 a barrel.  Meanwhile, gas prices have hit $4 a gallon, on average in the U.S., and are approaching levels from a few years ago.

Gold had dropped below $1,500 last Friday but finished above this level at $1,503 an ounce.  Silver surged 5% to close over $37 an ounce. 

Nvidia (NVDA, $19.75, up $0.43) reached into its coffers and flashed $367 million in front of privately held Icera’s face to get a deal done.  It was a great acquisition for the company as they may a bigger push into the 3G and 4G mobile market.  The deal is expected to close within a month and should start to payoff in the back half of 2012. 

Despite the lack of economic news and major earnings announcements, the Dow drifted higher to finish with a gain of 46 points to 12,684.  The index traded to a high of 12,722 with Alcoa (AA, $17.53, up $0.38) leading the way with a 2% pop.    

The S&P 500 added 6 points and closed at 1,346 but ran into the 1,350 roadblock once again.  The index reached an intraday high of 1,349.44 and was just enough to keep the technical picture blurry for another day.  We mentioned 1,350 as a key battle ground for the push back towards 1,375-1,400 or the breakdown to 1,325-1,300.

The Nasdaq managed a 15 point advance and settled at 2,843.  We mentioned in our Monday morning update to watch for 2,850 which is exactly where the bulls backed off.  Tech has shown some signs of breaking out but the bulls are having trouble with this area on their push to 3,000.

In M&A news this morning, Microsoft (MSFT, $25.83, down $0.04) has made a pitch to buy Skype for $8.5 billion in cash.  It is the largest deal ever for Microsoft in its attempt to keep up with Apple and Google but we think they overpaid.

eBay (EBAY, $33.12, up $0.40) paid $2.6 billion for Skype back in 2005 and sold a majority of its stake for $1.9 billion in cash in a leveraged buyout.  However, the company still owns 30% of Skype which it listed on its books for $620 million.  With Microsoft’s bid, that stake has just ballooned to $2 billion which is pushing shares of eBay near its 52-week highs this morning. 

Futures are pointing towards a strong start this morning.  Dow futures are higher by 45 points; S&P futures are up 6 points; Nasdaq futures are up a dozen.  Subscribers, check the Members Area for the trade updates.

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