Momentum intact through holiday

David Russell (
December 26, 2013

Stocks are pushing higher again today as bullish momentum continues after Christmas.

S&P 500 futures are up about 0.1 percent, while most European indexes are climbing by more than 0.5 percent. Asia was mixed in the overnight session, with Tokyo up 1 percent and Shanghai down 1.5 percent. Both rose during yesterday's market holiday in the United States.

Equities have been powering higher all year, fueled by an improving economy and ample cash on the sidelines. Strength has been spread across most sectors, but the buying has recently turned more aggressive as investors prefer technology and industrial stocks over utilities and consumer-related names. That reflects an expectation for more business spending, which also corresponds to increased merger-and-acquisition activity.

Our Heat Seeker and researchLAB market scanners have also shown positive sentiment in homebuilders during the last week. Steel makers, ocean shippers, and 3-D printing stocks have been strong as well.

The S&P 500 has closed at record levels in four of the last five sessions, following a month of
consolidation in anticipation of the Federal Reserve reducing monetary stimulus on Dec. 18. There are no more significant economic events until global manufacturing data is reported on Jan. 2. Weekly jobless claims are the only item on today's agenda.

In company-specific news, T-Mobile US rose 4 percent after Reuters reported it's in potential takeover talks with Japan's Softbank. (The stock was recommended on our exclusive Market Action webinar earlier this month and saw bullish call buying on Monday.) Retailers may also struggle today as they begin slashing prices to sell huge inventories of unsold merchandise.

Foreign-exchange trading is modestly bullish as the Japanese yen declines and the euro inches higher. Commodities are little changed, with copper and precious metals up slightly while oil is fractionally lower.

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