1850 Remains a Sticking Point for Market

More consolidation as investors continue to wrestle with the economic picture short term. New home sales surprised to the upside, but the benefit of the news faded as the day progressed. The chatter around the 1850 mark on the S&P 500 index is growing and that will set a negative tone if the market doesn’t find a way to advance through this. Thus, the anxiety among investors. In light of this chatter the volatility index did move higher on the day with the VIX hitting  14.26 on the close. Not much, but enough to watch.

Interest in earnings data today helped push retail stocks higher as XRT gained 1.8%. Target gained 7% on a better fourth quarter report, Wal-Mart was up 2% on news Sam’s Club would be testing an online subscription service to offset Amazon’s influence on their business. Home Depot was up 5% following earning on Tuesday followed by Lowe’s better than expected number today taking the stock higher by 5.3%. That coupled with new home sales rising pushed the homebuilders up 2.6% and along with the related retailers. Newfield Exploration was up 7.3% on earnings and First Solar fell 9% on missed earnings report. Definitely a day influenced by the good and bad of earnings season. Despite the moves the broad indexes still struggled to stay on the positive side of the ledger on the day.

The drop in yields continued today as well, keeping the rally in bonds going. TLT moved through the $107.20 level on Tuesday with a solid follow through today. IEF threatened the January high on the move higher. BND did move above the January high as it resumes the uptrend. The bond rally is rotation of money towards safety in light of the discussion above. Watch to see if this trend continues short term.

URA, Global X Uranium ETF climbed 3.8% again today following a similar move on Tuesday. The gains come on the heels of Japan’s pro nuclear stance for energy. This is another example of speculation driving prices and you take what you get and protect the downside risk or reversal.

Solar power continues to make solid gains despite the missed earnings report from FSLR. TAN, Guggenheim Solar ETF was up 3.2% today as the sector moves on positive momentum.

ITB, iShares Home Construction ETF jumps 2.8% on the new home sales data today. This was a positive for the sector and the surrounding parts. Still one to watch for more upside, but you have to protect against the downside should the economic data support the projected growth pattern.

Retail (XRT) was back in the news today with a gain of 1.8% as stated above. The follow through on the break above resistance on Tuesday was a nice benefit today on any trades taken on the higher move. This is a trade only for now. The sector needs to validate the progress in the numbers and then the upside will be sustainable.

MLPs were back in the news today with a gain and reversal back to the upside. AMJ cleared $46.50 and is in position to to move back to the $47.70 high and beyond short term.

The moves continue to show upside breakouts in various sectors, but the shift in leadership and momentum to new sectors like retail are keeping the broader indexes in check. This is a time to patient and let this all unfold one day at a time. Stay focused and disciplined as it all unfolds.