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MARKET COMMENTARY - Wednesday, October 22, 2014
Considerable gains helped the Dow Jones Industrial Average and the S&P 500 Index both join the Nasdaq Composite Index in rebounding above their respective 200-day moving average (DMA) lines. The Dow gained 215 points to 16,614. The S&P advanced 37 points to 1,941. The NASDAQ was up 103 points to 4,419. The large gains on Tuesday were backed by higher volume totals while leadership (stocks hitting new 52-week highs) expanded, making it a solid "follow-through day" confirming a new rally for the market (M criteria). Breadth was positive as advancers led decliners by nearly a 5-1 margin on the NYSE and 3-1 on the Nasdaq exchange. Leadership expanded as there were 27 high-ranked companies from the CANSLIM.net Leaders List that made new 52-week highs and appeared on the CANSLIM.net BreakOuts Page, up from the prior session total of 6 stocks. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were gains for all of the 5 high-ranked companies currently included on the Featured Stocks Page, a list that has waned as market conditions eroded. Disciplined investors know that new buying efforts may be made under the fact-based investment system only in stocks meeting all key criteria.
PICTURED: The Nasdaq Composite Index posted a +2.4% gain on higher volume while leadership expanded on Day 4 of the rally attempt - meeting the requirements for a convincing "follow-through day" which confirmed a new uptrend for the market (M criteria).
The major averages rallied as investors focused on company earnings and central bank activity. At the close all 10 sectors in the S&P 500 were in positive territory. Apple (AAPL +2.72%) rose following a positive earnings report and upward revisions to forward guidance. United Technologies (UTX +0.49%) edged higher after topping earnings estimates. The energy sector was up the most as the price of WTI crude extended Monday's gain by +0.1% to $82.81 per barrel. Marathon Petroleum (MPC +5.34%) and Halliburton (HAL +5.10%) both rallied. The defensive utilities sector was the relative underperformer with Duke Energy (DUK -0.53%) among decliners. Profit tallies will stay in focus after close with notable releases due out from Yahoo!,(YHOO +2.29%), Discover Financial (DFS +2.68%), and Broadcom (BRCM +2.84%).
On the economic front, existing home sales unexpectedly increased by +2.4% in September to a one-year high. In other news, the ECB purchased fixed income securities in France, Spain, and Italy, while reports surfaced that the asset purchases may encompass corporate fixed income as early as December.
Treasuries ended the session lower. The benchmark 10-year note was off by 8/32 to yield 2.22%.
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The Semiconductor Index ($SOX +3.61%) led the tech sector higher while the Biotechnology Index ($BTK +2.49%) and the Networking Index ($NWX +2.70%) also tallied solid gains on Tuesday. Strength in energy-related shares led to big gains for the Integrated Oil Index ($XOI +2.75%) and the Oil Services Index ($OSX +3.24%). The Retail Index ($RLX +2.38%) was a positive influence on the major averages along with financial shares as the Broker/Dealer Index ($XBD +1.75%) and the Bank Index ($BKX +2.11%) rose. The Gold & Silver Index ($XAU +0.25%) was a laggard as it barely inched higher.
Charts courtesy www.stockcharts.com
PICTURED: The Networking Index ($NWX +2.70%) is rebounding after a plunge to new 2014 lows.