U.S. Stocks were given a lift by IBM today, which reported earnings after the close yesterday that were $.25 above estimates for the 4th quarter. IBM also suggested a rosier outlook for 2009. Stocks were called to open a bit higher on the news, but the initial rally began to fade later in the morning. Ultimately, as the Geithner nomination hearing wore on, traders began to feel a bit better, and the market rallied strongly into the close. Financial stocks lead the way, with big gains in Morgan Stanely, JP Morgan and Goldman Sachs. Banks and REITs were among the best performing industry groups today.
The rally in stocks resulted in higher Treasury yields today across the entire curve, as traders further unwound long positions. 30 Year Treasury Bonds closed at one month low prices resulting in the highest yields in a month, over 3%. The Dollar made small gains today, but eased off its highs against the Euro and the British Pound later in the day. The Yen had made new contract highs in the March contract, but pulled well back off its highs by the close of trading.
Commodity prices were mixed today. Energies managed to make modest gains, while lumber prices continued to sink on the back of a report that homebuilders remain very pessimistic about future prospects.
Although it was a good day for stocks, there is much more work to be done before I will be convinced that this rally has any legs. The market still closed below yesterday's highs, and that is the first level of resistance. The market will then need to burst through the early January highs. As we are in earning season, key earnings reports will drive the market until the next big economic reports next month.
Overall, this was a good day for day traders, as there were a lot of big directional moves. These are the kinds of days day traders live for, and our system for finding and day trading stocks takes full advantage!
Scott Cole
www.bestdaytradingstocks.com
www.kungfutrader.com
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