Raise your hand if you know who or what the “Gang of Six” is.
It’s been a couple of years but the Gang of Six came back to life and helped the bulls push key resistance levels (once again) as the market finished nearly 2% higher on Tuesday.
The bulls already had some solid momentum going before the bell as sweet earnings from America’s best provided a springboard into the opening bell. The Dow surged to a triple-digit pop right off the bat and held those gains into the afternoon which is when the stampede began.
Although we couldn’t tell you the exact names of all 6 in the group, we do know that the Gang of Six is represented by 3 Republicans and 3 Democrats.
We said in our Weekly Wrap that we expected some kind of compromise between the two parties on the U.S debt crisis and evidently these Cowboys have been working behind the scenes for a few months now.
Some of you will remember the Gang from 2009 which was formed to deal with HealthCare Reform while this party was formed to deal with the U.S. debt crisis. The current group proposed $4 trillion in cuts over a decade which won-over Wall Street but will need to win votes in D.C. before anything becomes official.
Although the bears held resistance, they are now facing a possible breakout after having the bulls on the ropes on Monday. Tuesday’s turnaround only enhances what we warned you of heading into July and that was to expect increased volatility.
After our midday update yesterday, the bulls put it in second gear after hearing the President say Congress was close to raising the U.S. debt ceiling (no surprise there) and presented the backed the Gang’s ideas. With that said, the market stayed strong and the bulls went out long as the indexes closed near their highs for the day.
Believe it or not, the Dow posted its best one-day gain of the year by adding over 200 points, or 1.6%, to close at 12,587. The Blue-Chips reached a high of 12,607 which was just above the 12,600 resistance level we have been outlining for a few weeks. Next stop for the index is 12,800 with a possible shot at 13,000. Short-term support remains at 12,350.
The S&P 500 hammered out a 21 point win, or 1.6%, to finish at 1,326. The bulls did a tremendous job of holding down support at 1,300 and didn’t flinch when we dipped below this level, briefly, on Monday. The S&P closed above 1,325 and will next face tests at 1,334 and 1,350. If cleared, then 1,375-1,400 comes back into the picture but another failed rally could quickly lead us back down to 1,300, or worse.
We saved the best for last because the big story was Tech as the Nasdaq reclaimed 2,800 and 2,825. The index added over 60 points, or 2.2%, to settle at 2,826, just two points off its intraday high of 2,828.
Futures are pointing towards another beautiful open on the heels of Apple’s (AAPL, $376.85, up $3.05) booming quarter. As usual, the company smashed Wall Street’s expectations as analysts were way behind on their estimates, again.
We will go over their numbers later but shares were kissing $400 in after-hours trading last night and those gains have held this morning.
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Here is how we’re looking: Dow futures (+53), S&P (+7), Nasdaq (+20).