FINANCIALS LEAD MARKET HIGHER -- BANK OF AMERICA, CITIGROUP, AND GOLDMAN SACHS LEAD -- EMERGING MARKETS LEAD FOREIGN STOCKS HIGHER -- S&P 500 CLOSES AT TWO-MONTH HIGH AS NASDAQ CLOSES ABOVE 50-DAY LINE -- VIX FALLS 10% TO TWO-MONTH LOW
BANK STOCKS HAVE STRONG DAY ... Financial stocks led a strong day in stocks. Several big bank stocks had big chart days. The daily bars in Chart 1 show Bank of America (BAC) surging more than 3% in heavy trading. It's also testing its 50- and 200-day moving averages. Chart 2 shows Citigroup (C) in a similar situation after gaining 4%. Chart 3 shows Goldman Sachs (GS) scoring an impressive upside reversal in heavy trading. The fact that all three stocks are bouncing off support levels formed in January is also encouraging. Financial stocks have been market laggards over the last two months. Today's strong chart action suggests that may be changing for the better.
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Chart 1
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Chart 2
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Chart 3
FOREIGN STOCKS HAVE A STRONG DAY... Today's rally was global in scope. Chart 4 shows MSCI EAFE iShares (EFA) closing at the highest level in two months. Japan was the biggest EAFE gainer. Emerging markets did even better. Chart 5 shows MSCI Emerging Markets iShares (EEM) gaining more than 2% and hitting its highest close since early August. Chinese stocks led the EEM rally. Strength overseas spilled over to the U.S.
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Chart 4
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Chart 5
S&P 500 HITS TWO MONTH HIGH... U.S. stocks continued the rally that started in late September. The Dow Industrials gained 217 points (1.2%) to extend its rally. Chart 6 shows the S&P 500 gaining an even stronger 1.5%. More importantly, the SPX closed at 2023 which exceeded its mid-September intra-day peak at 2020. That put the SPX at a new two month high. The Nasdaq was even stronger. Chart 7 shows the Nasdaq Composite gaining 1.8%, and closing above its 50-day average for the first time since before the market slide in August. The fact that small caps did even better is a good sign. The Russell 2000 Small Cap Index (RUT) gained 2.2% to regain its 50-day average. All market sectors rose with the biggest gainers in financials (2.4%); a 4% gain in biotechs led a healthcare gain of 2.6%; and energy (1.8%). Consumer discretionary stocks rose 1.2% to regain all of yesterday's losses and more. To top it off, Chart 8 shows the CBOE Volatility (VIX) Index falling -10% to close at a two-month low at 16.05. The VIX closed below its 200-day average today. The big question is whether global stock indexes will be able to exceed their 200-day lines.
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Chart 6
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Chart 7
