Bulls have shown some resiliency the past 2 weeks and it continued today as a serious gap down at the open was met with a steady beat of buyers by noon and throughout the afternoon. By day’s end, we had positive closes for both major indexes with the S&P 500 gaining 0.44% and the NASDAQ 0.87%. So today you had: (i) a down open met by buying, and (ii) buyers stepping in even with weaker economic data – both positives.
“I think it’s the move in crude and month-end flow,” Jeremy Klein, chief market strategist at FBN Securities, said, noting many investors were waiting on the sidelines for the month-end to get out of the way and to see if the S&P 500 could break 1,950.
In economic news, the Commerce Department said single-family home sales dropped 9.2% last month to a seasonally adjusted annual rate of 494,000 units, almost unwinding December’s sharp increase. Economists had forecast new home sales, which account for 8.3% of the housing market, slipping to only a 520,000 unit-rate last month. I wouldn’t be too worried about this as existing home sales – which are 90%+ of the market – continue to flourish.
Fun fact: 45% of Americans pay no federal taxes.
Roughly half pay no federal income tax because they have no taxable income, and the other roughly half get enough tax breaks to erase their tax liability, explains Roberton Williams, a senior fellow at the Tax Policy Center.
We had mentioned yesterday bulls didn’t want to see the S&P 500 taking an extended break south of 1900; that happened only briefly this morning. Looking at the S&P 500 chart you see a lot of intraday lows at 1875ish over the last month so that looks like a good level to call a mini support.
The NYSE McClellan Oscillator remains in a relatively rare level of overbought.
Oil had been down significantly in the futures market but reversed that as the day progressed – and for much of the past few months: as oil goes, so goes the market. On the chart, oil sniffed its head back over this nearly 4 month downtrend line. We are still getting a lot of wicked volatility.
Target (TGT) shares gained 4% after the company swung to a profit in the fourth quarter, helped by a gain on the sale of its pharmacy and clinic businesses.
Papa John’s sizzled on earnings.
First Solar (FSLR) jumped 12.4% after the solar power company late Tuesday reported quarterly results that beat forecasts. This was actually a reasonably positive chart coming into the day considering the havoc in the market the past few months.
After the bell, Salesforce.com (CRM) surged 9% to over $68 after its fourth-quarter results and guidance reduced fears of a slowdown in software spending.