Daily Market Reports | Nov 12 2009
By Greg Peel
The Dow closed up 44 points or 0.4% while the S&P gained 0.5% to 1098 and the Nasdaq added 0.7%.
Yesterday’s stronger than expected Chinese economic data provided Wall Street with a positive lead-in. Rapidly growing Chinese industrial output and retail sales have US exporters licking their lips and risk traders once again feeling more comfortable. Stocks flew from the bell, with the Dow up 95 points into more blue sky by 10.30am and the S&P 500 setting a new intraday high at 1105 (up from 1101 previously).
A boost was also provided by leading homebuilder Toll Brothers which had sharply lifted its revenue guidance when it reported after the bell on Tuesday, sending its shares up 17% and reinforcing views that the US housing market has bottomed. And more talk from the Fed that interest rates would remain at low levels for some time reinforced a warm inner glow.
In response to the stock market, the US dollar dutifully fell and marked a new 15-month low at 74.77 as the euro hit US$1.50 once more. Gold shot up to US$1119/oz. Oil set off towards US$80/bbl again.
The pound was also stronger but when British officials came out to talk down the currency and suggest further quantitative easing may be needed, the pound turned tail and the dollar bounced. The euro, which seems to be meeting constant (central bank?) resistance at US$1.50 slipped back. The dollar index ultimately closed at 75.11 – a few ticks up from Tuesday.
Stocks thus lost their bottle and by lunch time the Dow was square again. From lunch to the close, Wall Street eked out an uncertain gain to finish up 44 in the Dow, but more importantly the S&P 500 closed at 1098 – one point above the previous high.
While strictly a higher high, one point is not enough to excite technical analysts. It was Veterans Day in the US last night, closing banks, bond markets and government offices. Volume was thus understandably thin, but then volume has so far been fairly minimal for all of November. It appears the hedge fund brigade booked welcome profits at the end of October and is now content to wait and watch. November is traditionally a good month for stocks, but are we looking at tradition here? September is normally the weakest month and October the most volatile. Both months were positive in 2009, and in both 2008 and 2007 November was a shocker.
Interestingly, stocks closed up and the dollar closed up and gold closed up. Indeed, gold virtually ignored the afternoon bounce in the dollar index and finished up US$11.50 at US$1116.20/oz for the day – a big move compared to less convincing moves elsewhere. Oil closed only US23c higher at US$79.28/bbl. The Aussie slipped slightly to US$0.9288.
Base metals posted another day of indecision and general disinterest, with only lead breaking the 1% movement mark with a 1.6% rise.
The SPI Overnight closed up 20 points or 0.4%.
We appear to be poised. Most of the commentary coming out of Wall Street at present is to the bullish side, taking heart from what was strictly another failed correction and looking towards a (again) traditional Santa Claus rally. The failure of stocks to correct was concurrent with a failure of the US dollar to bounce on short-covering, as many have been expecting. The dollar index is finding apparently sufficient support at 75.00 on the index and the euro can’t seem to push through US$1.50. If the dollar cannot fall, it is unlikely the stock market can rally. But then were something more exogenous to really push either stocks up or the dollar down, we could be off and running again. Technically, we’re on a cusp. Looking at this one-year chart of the S&P 500, one notes the rally is tracing out somewhat of an arc:
Stand by today for Australia’s monthly unemployment number.
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