Daily Wrap
DJIA +308.41 (+2.35%) to 13,412.55; S&P 500 +36.23 (+2.54%) to 1,462.42; NASDAQ +92.75 (+3.07%) to 3,112.26
The majority of today’s gains were made on the open resulting from the market’s elation on a fiscal cliff deal. I would like to think that this is the last time we focus on Washington but unfortunately I feel it is not. Otherwise today was a strong rally on better than average volume and the second one in a row at that. What was even more interesting was the fact that Small caps and Tech lead (including everyone’s favorite AAPL) which lends to the fact the rally was broad and strong.
A stock of the day today was a name we have been tracking for about a month now, Zipcar (ZIP) made waves. For anyone who stuck with the name saw a near 50% gain on news that Avis Budget (CAR) agreed to acquire ZIP for $12.25 per share in cash.
Another current trade idea having a great day today after a previous Breakout and re-test of B/O level is US Steel (X) moving over 8% today on a Credit Suisse upgrade and $30 price target. This name looks like it can continue to have legs even after the 10% rise since Breakout out but the broad triangle is wide so there could be backing and filling along the way. X looks like it might want to remain a name for 2012 and possibly even meet or exceed Credit Suissse’s $30 price target. You can see that and other analyst notes at the Upgrades/Downgrades section.
Surprisingly not everyone was enjoying today’s rally. Dole Food Co. (DOLE) announced that their fresh fruit business is continuing to experience declining earnings.
Today was another strong move in the markets on the news that Congress reached a deal on the fiscal cliff. It would seem as though the markets had already discount some or all of the bad and when the good happened there was nothing left to do except rally. I believe this is also a strong mutual fund flow period which could be helping. The Daily S&P 500 chart is starting to show some negative divergence on the MACD but nothing of note on the RSI. The one hour SPY chart has nothing close to divergence yet and would likely need a few more days of trading to set some up. While the biases should remain to the upside, in the short term we might be slightly extended and in need of a consolidation. Also, out in the horizon but not necessarily right here are some swing indicators I track which are starting to get into overbought territory. They are more sentiment indicators than triggers but are something I pay close attention to.
