Courtesy of John Nyaradi.
Major U.S. stock indexes climb back from early losses to scale higher on the mountain of recent rally
After a rough morning, U.S. stock markets climbed a mountain of worry to end mostly higher. The Dow Jones Industrial Average was mostly flat, gaining just 2 points, but the S&P 500 (NYSEARCA:IVV) added +0.3% while the Russell 2000 (NYSEARCA:IWM) gained +0.7% and bell whether Nasdaq 100 (NYSEARCA:QQQ) added +0.8%.
Stock prices were supported by positive unemployment reports from ADP which reported gains in private sector employment and U.S. weekly new and continuing unemployment claims declined. Yesterday, auto sales were boldly positive and same store year over year retail sales also improved to add cheer to the domestic picture. Today’s economic report from the ISM indicated that the non-manufacturing sector continued to grow with a reading of 52.6 which was good news since readings above 50 are considered expansionary.
Action in the commodity sector was mixed with gold (NYSEARCA:IAU) gaining 0.7% and oil (NYSEARCA:USO) declining 1.4%.
Oil analysts said the sell off in oil was caused by a big increase in oil inventories which was unexpected by market participants. Oil closed at $101.80/bbl after the Energy Information Administration announced that supplies had increased by 2.2 million barrels last week versus an expected decline.
Still, as seen in the chart below, oil remains in a strong bull market.
chart courtesy of www.stockcharts.com
Gold (NYSEARCA:IAU) had a good day, rising 0.7% for its highest closing price since mid-December and the precious metal has gained 5% since last Friday.
Silver (NYSEARCA:SLV) also gained today, rising 0.7%. Silver is entering its seasonally strong time of the year which extends between September and April and is driven by jewelry demand and industrial usage. Also, this year the electronics industry is recovering from the flood in Thailand and so silver demand has been temporarily dampened by factory closings. This slack is expected to disappear in 2012 as these factories come back on line and resume normal production.
On a technical basis, gold and silver are still in bear markets but have shown impressive strength over the last five trading sessions as they bounced off recent lows.
Tomorrow brings the widely anticipated December Non Farm Payrolls and Unemployment reports.
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