Despite the high CPI, the market rallied today, in a big way! Even though CPI came in higher than expected, the market chose to focus on the good news. Wells Fargo (WFC) reported strong quarterly results and raised its dividend. WFC shares jumped +32.76% and led the whole financial sector on a tremendous bounce! GS added nearly +10%; MA gained +8.32%; JPM hopped +15.86%; and, MER garnered +13.41%. (JPM is reporting tomorrow before the market and MER comes out with its earnings after the market closes.)

The techs were strong also, led by AMZN, which rose +7.18% on talks of a new Kindle being released. Other usual suspects did well also: BIDU +5.99%, RIMM +4.87%, and GOOG +3.78% (GOOG reports tomorrow after the market). After the market, EBAY reported better-than-expected earnings but was soft on its guidance. EBAY shares were trading lower by 6.76% in AH, basically erasing today’s gain.

Oil prices continued to drop, perhaps contributing to the market’s strength today. USO went below $107 and closed at $109.25. Yesterday, I mentioned that below $110, we could see oil’s uptrend being finally turned. So, let’s see if this $110 can now become a resistance. Below $110, the nearest support for USO is at around $100-$102.5. The energy sector also kept slumping. XLE fell another 2.57%. On the other hand, solar stocks were very strong! SPWR reports tomorrow morning. The whole sector is ready to jump if SPWR brings encouraging news.

The Dow gained +276.74 points; SPX jumped +30.45 points; Nasdaq soared +69.14 points:

VIX dropped 12.05% to close near 25. This is good for the market. As mentioned earlier, techs were very strong today: SOX (semiconductors) +3.65%; INX2 (Internet) +3.54%; SWH (software) +2.76%; BTK (biotechs) +1.11%. GLD (gold) slipped 1.8% while SLV (silver) slid 0.83%. XLF (financials) flew up +13.1% and HGX (housing) hopped +8.42%. PBW (clean energy) added +4.88%. FXI (Chinese ADRs) gained +5.09%.

SPX

SPX jumped +30.45 points to close at 1245.36, above the 1240 level. It closed just below its 10-day MA. The MACD went higher.

Nasdaq

Nasdaq soared +69.14 points to close at 2284.85. It closed above the 2250 level. Its MACD was higher, as well.

It is certainly good to see VIX back around 25. It was also good to see that the market focused on the positve news and not on the high CPI. This further confirms that the market is oversold and is waiting for stimuli to make its rallies. The financials made a solid comeback today. We’ll have to see how JPM and MER do with their earnings results tomorrow. 

Good night and HappyTrading! ™