The Daily Recap is starting to sound like a broken record... Markets surged once again Tuesday, making five-year highs and continuing the recent bullish trend. The S&P climbed 0.47%. Momentum and volume may be slightly lackluster, but price action is king. The S&P opened higher and pulled back to fill the gap in the first hour, but trended higher all day from there. The $148.50 pivot was rejected the first time around, but it is a strong sign that we were able to push through it on the second attempt.
We continue to see good breadth to this rally, with financials continuing to lead the charge. A lot of people want to be the first to the "short party," but as they say, you never short a dull tape. The market has been gripped by high-stakes headlines over the last few year, and right now we don't have any headline hyperbole to obsess over. The debt ceiling will likely come into focus over the next two months. Ultimately, just continue to ride the trend until it changes.
In the leading financial sector, Goldman Sachs (NYSE;GS) continues to stand out. The stock is starting to reassert itself as the group leader, and finished the day up 1.04%. Bank of America (BAC) reversed a bit today to give you a new level to trade against at $11.02. The next objective will be to close above $11.45-11.55. Wells Fargo (WFC) continues to consolidate as earnings were not enough to ignite another move. If it gets above $35.20-35.50 it will be more compelling to me. JP Morgan (JPM) and Citigroup (NYSE:C) also look okay.
Homebuilders (XHB) initially sold off after some weak data this morning, but were able to recover into positive territory. The sector remains at highs. The Transports (IYT) also continue higher, but I feel like the rally in the ETF is getting a little long in the tooth. I may look for a potential cute short trade in the coming days.
The casinos are back in play but a little mixed at this stage. Las Vegas Sands (LVS) would be my focus in the sector as it is breaking above another level.
Tech continues to be mixed, and that will likely continue as we get into the thick of earnings season. Google (GOOG) bounced back from a tough report last quarter with a strong report after the close today. The stock is currently 4.32% higher after hours. IBM (IBM) also delivered a strong report after the close and is trading 3.43% higher after-hours. The strong numbers from both companies could provide a further boost to this irrepressible market tomorrow.
Apple (AAPL) is currently out of play, but reports earnings tomorrow. I crept into a small call spread this afternoon and may look to add to it tomorrow ahead of the report.
Research in Motion (RIMM) continued its recent resurgence. The initial catalyst for this renaissance was buzz about Blackberry 10, but today's 13.01% gain was triggered by comments from the company's CEO, who suggested he could look to sell-off the company's hardware unit.
I pride myself on being a prudent trader who doesn't chase exuberance, so I have not been looking to initiate a lot of new long positions. But that doesn't mean I am taking full profits on all my positions and looking to position short. I continue to trim size during the ride up, but will wait for a push-through failure or break of the 8- and 21-day moving averages to change my approach.
*DISCLOSURES: Scott Redler is long GE, MGM, KORS, WMT, GLD, LVS, LNKD, DBC, CAT, F. Short SPY.
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