The bulls came into the week looking to keep their momentum following a test to new 2011 lows the prior week. Although they won the previous week, the bulls were still facing the uncertainty of Europe’s debt crisis and the start of 3Q earnings season which got off to a shaky debut with Alcoa’s (AA, $10.26, up $0.16) numbers.
Both fronts improved as Monday ended with a 3% pop as the bulls got good news over the weekend. Wall Street was impressed with the determination to come up with a plan to recapitalize the European banks and futures were pointing towards a strong start that morning. The plan-for-a-plan to fix Greece powered the indexes higher and should be in place ahead of the G-20 summit at the start of November.
Following Monday’s surge, we expected some pullback on Tuesday but the market held up well as both the S&P and Nasdaq finished slightly higher. The Dow fell 17 points but had broken through resistance at 11,350 on Monday so it was good to see this level hold.
The bears went into Wednesday’s session trying to hold down resistance on the Nasdaq and S&P but were unable to keep the bulls at bay. The major indexes jumped 1%, on average, as the S&P cleared 1,200 while the Nasdaq zoomed past 2,600. The Dow traded to a high of 11,625 as all three indexes traded past our near-term price levels we outlined last week.
Thursday was a flat session but the bulls got good news after the bell when Google (GOOG, $591.68, up $32.69) announced earnings. The company easily crushed Wall Street’s expectations as shares soared to nearly $600 in after-hours trading. Futures were strong before the opening bell on Friday and from there it was a stampede.
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Dow futures are down 48 points to 11,518 while the S&P 500 futures are off 2 points to 1,217. The Nasdaq 100 futures are declining 17 points to 2,350.]]>