Thursday recap: US Equity markets pushed higher on Thursday, as prices for Crude Oil stabilized after Wednesday’s 6% decline and M&A activity in numerous market sectors remains brisk.
Major stock market averages rallied in the last hour to close +0.3% to 0.5% higher although it was a bit of a roller coaster ride getting there. After an initial rally failed within the first half hour, stocks began to recover off their late morning lows as Crude Oil turned positive at midday.
After a strong close for the first time in a couple weeks, market averages appear to be setting up for another run at key resistance levels of DJIA 18,000, S&P 500 2100 and NASDAQ 5000.
Treasuries sold off a bit as the 10 year yield rose to 1.96% and the DJ Utilities -0.5% at 586.76 tested and held their 200 day MA at 583.80.
The DJ Transports +0.5% at 8708.51 rallied for the 3rd straight day and has regained its 200 day MA. The next meaningful resistance level for the Transports is the 8775 – 8800 level, followed by the 50 day MA just a few points below 8900.
NASDAQ +0.5% at 4974.56 matched the gains by the S&P 500 +0.5% at 2091.18, despite INTC deciding not to follow through with talks to by Altera, which had added some juice to the lagging semiconductor space the last couple days.
One Caveat from Wednesday, is that market breadth did not impress at all, as gainers and losers were close to dead even in both the NYSE and NASDAQ markets.
Where do we do from here? 1Q Earnings Season gets into first gear next week and its widely expected that we will have the first down quarter for S&P 500 earnings since 2009.
The 2 biggest culprits here are the strength of the US $$ and the sharp decline in Oil prices that started in 4Q 2014. The test will be how the market responds to earnings in light of dour expectations and what guidance companies give for the remainder of 2015.
Many companies have become very adept at “managing” earnings expectations the last few years and it would not be surprising to hear a tepid forecast for the next couple of quarters.
The Early Line: Eurozone stocks are sharply to another session of fresh all time highs, although US markets have not followed their lead the last 4 to 6 weeks. We’ll watch the price of Oil closely as a guide for market direction as US stocks followed the commodity closely yesterday.
We’ll also keep a close watch on market breadth, as it trailed the performance of the major averages yesterday. It’s not uncommon for the advance/decline stats to lag a market move that happens late in the day.
The economic calendar is void of impact data, but we do have 2 FED governors speaking today, Jeffrey Lacker at 8:00 AM and Narayana Kocherlakota at 12:15 PM
Watch Tim this morning on the @Benzinga #PreMarket Prep show answering questions LIVE at 8:35am ET!
Tune in here: http://bit.ly/1fejpV2
TJM Investments, LLC
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