Today's trading activity suggested a hint at a more positive outlook on the economy by some traders. The Dollar rallied sharply against the Euro as Treasury prices plunged. The 10 Year Treasury yield has jumped from a recent low of under 2.1% to the 2.5% level. This has buoyed the Dollar against the Euro and the Yen, which have also weakened against the Canadian $, Aussie $ and the British Pound as of late. The Pound continues to be the weakest currency of the major currencies, but may be putting in a solid bottom at current levels against the Dollar.
The other indicators suggesting a more positive outlook on the economy is in the sector analysis. The strongest industry group today was the resorts and casinos group, up over 10% on the day. Residential construction was also up sharply today, and, in spite of the strength in the Dollar, the energy sector continued to rally. Crude Oil prices approached $50 again today, and held above a recently penetrated downtrend line, dating back to early November. If it is able to penetrate the December 10 high, watch for a rally up to the $60 level.
Ahead this week is the release of the December Employment Report. Any sort of improvement in the data will be very welcome news. After the release of the November report, the market managed to hold its lows and has traded a bit higher since.
The chart below is SQNM, one of today's big movers. This has been a strong stock in the face of the bear market that has gripped the market for over a year. Today, it broke out to a multi-month high on high volume. This is a classic opening range breakout type of trade.
Scott Cole
www.bestdaytradingstocks.com
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