9:00am (EST)
Well, that was easy…
The bulls continued their red-hot “September to Remember” tour by staging another impressive rally that easily pushed the market to the verge of breakout territory. We had a feeling when we were doing our Weekly Wrap on Sunday that the bulls would push the action ahead of today’s Federal Open Market Committee’s (FOMC) monetary-policy announcement but we were a bit surprised on just how close they came to taking out our targets ahead of today’s fireworks.
The big event will hit Wall Street at 2:15pm (EST) and the market will likely make a very strong move north or south. Of course, the devil will be in the details but most “experts” are expecting the Fed to hold off on expanding its quantitative easing (QE) program. If you recall, Bernanke came to the market’s rescue several weeks ago and started buying Treasury’s, saying, the Fed would do whatever it takes to keep the U.S. out of a “double-dip” recession – which by the way is over. Recession over you say? More on that subject in a minute…
The Dow was strong all session as it surged 146 points, or 1.4%, and settled at 10,753. The index traded to a high of 10,774 and came within spitting distance of our 10,800 top. The Dow finished above the 10,700 level for the first time since mid-May and, believe it or not, Cisco Systems (CSCO, $21.75, down $0.11) was the only Dow component that didn’t make it to the party on Monday.
The S&P 500 added 17 points, or 1.5%, to close at 1,142. A lot of technicians were watching the 1,130 level as confirmation that a new bull market has begun and the index closed above this level for the first time since mid-May. Our target is 1,150 as a “possible” top and the index traded to a high of 1,144 yesterday. However, if the 1,150 level is taken out then we could easily see another 50 points, quickly, to the upside.
The Nasdaq once again led the race as it actually surpassed our target of 2,350 by zooming 40 points, or 1.7%, to finish at 2,355. The index also took out its June intra-day high of 2,341 and could test the April high of 2,500+ if the bulls throw a haymaker and knock the bears out.
The one thing that “concerns” us though about the September rally is the lack of volume which does not seem to confirm the recent run the bulls are on. However, we doubt the Fed will announce another “QE” package until the end of the year and the only thing that could spook this market is if the Fed says something scary in their statement.
Perhaps yesterday’s rally all came down to a report that declared the U.S. is “officially” out of the recession. The National Bureau of Economic Research said that the recent recession ended more than a year ago and if we were to go into another one, it would officially mark the start of a NEW recession. Let’s see, so the recession that started in late 2007 ended last summer? Interesting…
Futures were slightly higher to start today’s session and got a nudge after housing starts came a little while ago. They jumped 10.5% to an annualized rate of 598,000 while building permits increased to 569,000. Wall Street was expecting a number of 545,000 with building permits coming in at 560,000.
As we head to press, Dow futures are higher by 17 points to 10,687 while the S&P 500 futures are up by 2 points to 1,138 The Nasdaq 100 futures are showing an advance of 5 points to 1,986.
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