Tuesday, May 14, 2013

Turnaround Tuesday Sends Stocks Higher as Trading Volume Jumps

The Dow closed higher on Tuesday for the 18th straight week moving higher by more than 100 points. Leading the market higher was the Russell 2000 jumping more than 1.25%. S&P 500 gained more than 1% while the NASDAQ lagged finishing higher by .69%. Surprisingly the VIX jumped more than 1.75% outpacing the S&P 500. Is a big point move coming? AAPL was hit hard during the trading session sending the NASDAQ lower and ultimately keeping the NASDAQ from bigger gains. Despite the AAPL sell off the NASDAQ found support along with the rest of the market pushing up into the highs of the session. Another bullish session for the market reminding those who are fighting the trend is very dangerous. Financials were a hot sector today led by BAC, GS, and JPM. These stocks have been lagging the general market since March. A positive sign for this uptrend would be to have financials participate. GS breakout is solid with volume following price something we haven’t seen very much from this market. Many will look to find the catalyst for the moves, but in the end does it really matter? No, all that matters is that you take the signal and ride the move higher. Volume pushed higher today and it was above average. We haven’t seen volume on new highs in quite some time and above average to boot. Low volume new highs have been a staple for this market and today was just a break from the norm. We don’t have any evidence today is a top in the market and given what we saw from Financials today we should continue to push higher. We can think of plenty of reasons for volume like we are beginning to see panic buying. However, until we see real signs of a market top we aren’t going to begin fishing for reasons. One thing that will be interesting to watch will be JGB – Japanese Government Bonds and how their yields move over the course of the summer. The US 10 year treasury has moved roughly 30 basis points from their lows. A big move in yields will have adverse effects on debt servicing costs. Something to keep an eye on as time moves forward. Rising yields are not good for those who have a heavy debt load. Until this trend ends we are going to stick with it.

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