The market started to turn higher pre-market following better-than-expected jobless claims and housing starts data, and picked up steam during the session to finish with healthy gains. All major indices finished up around 0.6%. The S&P broke higher out of the slightly ascending channel that has been building since the market opened sharply higher on New Year’s Day.
Yesterday the banks, which have been leading the market for the past few months, continued higher thanks to a blockbuster earnings report from Goldman Sachs (NYSE:GS) and a decent one from JP Morgan (NYSE:JPM). Goldman opened at new highs and continued during the session while JPM rallied from negative to positive. Still, the strength from the banks wasn’t enough to push the indices out of the range. Today, the banks were weak thanks to only a narrow beat from Bank of America (NYSE:BAC) and a miss from Citigroup (NYSE:C), but the market rallied out of the range. Go figure.
In addition, Apple (NASDAQ:AAPL) staged its most impressive move in weeks yesterday, finishing up more than 4%, and not even that could push the market higher. AAPL finished today down 0.7%, which follows the recent theme of AAPL being unable to sustain a multi-day bounce. Most recent AAPL bounces have lacked power and fizzled out quickly. As a trader right now, your focus should be elsewhere, in my opinion.
Gold (NYSE:GLD) opened lower this morning due to the perception that strong data decreases the half-life of central bank easing, but the precious metal rallied at 10am for the same reason when the Philadelphia Fed reading was lackluster. GLD looks to breaking out of a multi-month descending channel as rhetoric about potential currency wars grows louder.
We have been talking about the significance of September highs at 1474, and today we closed back above them at five-year highs. The important thing now is to see whether we can hold up at these levels and continue to digest, or whether we get some type of pullback. The slow intraday acton may be a little bit frustrating for short-term traders, but it is exactly the type of action swing trading bulls like to see.
By Scott Redler and John Darsie
Disclosure: Scott Redler is long MSFT, GLD, TBT, GE calls, CAT, DBC, TASR, XHB, DELL, LNKD, F. Short QQQ, SPY.