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Market Wakes Up, Breaks Out of Mini Upper Range to New 5-Year Highs

John Darsie

The S&P broke higher out of the 2013 upper range to close at five-year highs once gain. The index finished the day up 0.75%, above the pivot high from January 4th of 1467.94. Stocks opened higher this morning, but were weak off the open to fill the gap. However, the market rallied the rest of the day after 11am ET to close on its highs.

While the action Monday through Wednesday was slow and monotonous for traders, it was ultimately just healthy rest for a market that had its biggest weekly gain in more than a year. The indices priced in the fiscal cliff compromise, and now the focus is elsewhere. The most immediate input will be earnings season, which kicked off Tuesday with Alcoa (AA), but really starts in earnest next week. Wells Fargo (WFC) reports before the open tomorrow, a report we will be watching closely.

Apple (AAPL) remains lackluster despite a sizable gap up this morning on a potential news catalyst. AAPL's iPhone, its biggest revenue driver, dominates market share in the US, and its most clear opportunity for additional growth lies in China. This morning there was news that Apple CEO Tim Cook was in China discussing a strategic relationship with China Mobile, and the stock was active pre-market as a result. However, the up open was sold off sharply and the gap filled. AAPL did stage a decent bounce in the afternoon with the rest of the market, but overall price action remains bearish.

The banks bounced back after some weakness yesterday. Bank of America (BAC) lead the multi-month move in the banks, but broke down hard yesterday. Today, BAC demonstrated tremendous resilience, bouncing 3.06%. Goldman Sachs (GS) was also strong, surging 2.27%.

The ags continued higher today, showing commitment to recent moves higher. The Agribusiness ETF (MOO) finished the day up 1.05%. The sector looks poised for a strong year.

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*DISCLOSURES: Scott Redler is long GE, DECK, LNKD, BAC, INTC, F, TBT, FB. Short SPY.