The major indices followed through on Tuesday's strength yesterday morning,
then pulled back at mid-day, but the bulls resumed control late in the day.
Stocks scored another session of solid gains, as the S&P and Dow played
"catch up" to recent relative strength in the Nasdaq. The S&P 500 and Dow
Jones Industrial Average advanced 1.7% and 1.6% respectively, while the Nasdaq
Composite took a breather, gaining "only" 0.4%. The small-cap Russell 2000 also
took a rest from its bullish divergence, but still gained 0.6%. The S&P
Midcap 400 motored 1.5% higher. The S&P 500, Dow Jones Industrial Average,
and S&P Midcap 400 closed at their best levels of the day, while the Nasdaq
Composite and Russell 2000 finished in the upper third of their intraday
ranges.
Confirming the bullishness of the S&P and Dow was the fact that turnover
rose 8% in the NYSE. That marked the fourth day of higher volume gains in
the S&P and Dow within the past seven sessions. Given that no bouts of
higher volume selling ("distribution") countered the four days of institutional
buying, it's safe to say trading has been very healthy "under the hood." Total
volume in the Nasdaq eased 2% yesterday, but that's not a big deal considering
the leadership the Nasdaq has shown lately. Advancing volume in the NYSE
exceeded declining volume by a respectable margin of 5 to 2. The adv/dec volume
ratio in the Nasdaq was positive by 3 to 2.
With flat action in the U.S. dollar, several commodity-related ETFs finally
bounced sharply yesterday. Oil, Coal, Natural Gas, and Agriculture all
registered solid gains. The SPDR Gold Trust (GLD) gapped down below its 50-day
MA yesterday, but finished at its intraday high. Of all the commodity ETFs,
Market Vectors Coal (KOL) held up the best during the recent distribution in the
commodities. As such, it makes sense that KOL was the largest advancer of the
group yesterday. On a technical level, KOL also broke out above resistance of
its intermediate-term downtrend line, as well as its 20-day exponential moving
average:
If, with an emphasis on the word "if," commodities continue to recover
further, KOL has the best chance for moving back towards its prior highs.
Nevertheless, with resistance of its 50-day MA just overhead, there is still a
lot of overhead supply the ETF must contend with before gaining much headway.
Yesterday, we explained our rationale for buying Claymore Global Solar Energy
(TAN) on Tuesday. Specifically, we liked its "double bottom" formation, which
was followed by a breakout above its intermediate-term downtrend line. It gained
another 1.2% yesterday, but the real action occurred in the after-hours market.
