Markets open higher stock specific moves from LSI Logic and Exxon Mobil pushing prices the futures higher. The economic data helped as well with productivity increasing 3% versus the previously reported 2.7%. Labor costs fell 1.4%, better than expected. Industrial production was up 1.1% versus the 0.4% expected and Empire Manufacturing came in at 0.98 versus the -2.2 from last month. The positive economic data and stock news set the stage for a positive open and buyers took over from there. It was a positive day overall, but by the close the early gains had begun to trickle lower. All eyes still remain on the FOMC meeting which concludes on Wednesday.
S&P 500 Index held the 1775 level of support and closed up 11 points to 1786. The NASDAQ index held support at the 4000 mark gaining 28 points to close at 4029. Dow was up 130 points to 15,885. Russell 2000 index gained 12.7 points to close at 1119 and holding above the 1100 level. Some breathing room for the indexes, but expect the heavy lifting to start tomorrow with the first day of the FOMC meeting.
Sectors to Watch:
Energy started out as a leader and held the gains throughout the day. XLE, SPDR Select Energy ETF was up 0.95% for the day and Tesoro led the sector with a gain of 3.8%. Scanning the sector showed plenty of breakout moves and opportunities for short term trades. The refiners were one of the key leaders in the sector.
Technology was up 0.9% on the day. XLK, SPDR Technology ETF was of interest as the Semiconductors (SOXX) bounced back following last weeks selling. The gain of 1.3% pushed the index back above the $69.50 level again. This is the previous high for the trading range and we are attempting to break higher again. Networking (IGN) bounced 1.4% and Internet (FDN) was up 1.1%. This is a sector to watch for a follow through moving forward.
Industrials (XLI) bounced 1%, Transportation gained 0.8% and Small Caps gained 1.1% to lead the broad indexes. All were bounces off support that many expected on Friday.
Commodities were on the rise today with the exception of natural gas. The milder weather reports took their toll on the commodity falling 2.7% on the day. The commodity has been on a solid run higher with the cold weather across the country prompting investors to expect demand to rise. Gold was up more than 1% early, but sold back to $1240 and a gain of 0.4% for the day. Technically the metal continues to build a bottom and attempts to move higher, but the conviction buying has still not materialized. The miners (GDX) were up 1.1% on the day and still looking for some leadership. Crude oil bounced back to $97.34 up 0.7% for the day. The recent worries relative to the FOMC meeting has stalled the bounce of the commodity with a break of support on Friday. But, the bounce today puts the upside in play again and if we can break above the $98.50 resistance level.
Bond yields were at 3.9% and still flirting with the 4% level on the thirty year bond. Watching the FOMC meeting do determine direction short term. Treasury bonds tested lower and BND was even on the day.
Financials (XLF) held support at $21, but still has plenty of work to get back on track to continue the uptrend. Regional banks (KRE) was the leader gaining 1.5% today. The brokers (IAI) continue to provide the leadership on the upside with the sector breaking to a new high today and up 0.7%.
Overall the bounce today was welcomed by all, except for the short sellers. The move gave some room for markets to deal with the result of the FOMC meeting. The focus is on no change from the Fed and to kick the can down the road into next year. If the cuts come in December I am still of the opinion that nothing can keep the selling at bay. Thus, we have to be focused and keep our stops in place. We are taking it one day at a time.