Naz Recaptures 2300
Weaker-than-expected existing home
sales and yet more rumoring of a mid-week rate cut helped rally all three major
averages Monday, as the Dow added 1.9%, the Nasdaq gained 2.0%, and the S&P
500 rose 1.7%. Thanks to a broad-based rally, all three averages finished at
their highs of the day.
Applying proprietary formulas on the
CBOE Market Volatility Index, we
had an unusually bullish six up signals before the open from the
TradingMarkets.com Market
Bias Indicators Page. This strongly suggested that stocks could rally
today, which they whole-heartedly did.
January existing home sales fell by 6%
to an annualized rate of 4.65 million, which was below the 5.0 million analysts
expected, and that fueled hopes that the Fed will have all the more reason to
cut rates before its March meeting.
Traders were not overly thrilled with
the volume Monday, as a tepid 1.82 billion shares changed hands on the Nasdaq
and 1.11 billion shares traded on the NYSE.
“Fear is the prevalent sentiment
and we buy mass fear. Our sentiment model
says this is the highest fear in more than two years.
Three of four polls are bearish. The
put/call volume ratio reflects the same high fear,” said Paul Rabbitt,
President, RabbittAnalytics.com.
“The plunging NASDAQ has sucked
wealth away from consumers. Our bet is
the plunging stock market will re-energize the Fed to cut more vigorously than
we thought last week. Keep in mind that we will get very important consumer and
manufacturing sentiment figures this week,” he added.
According to preliminary numbers, the
Dow gained 200.22 to 10,642.12, the Nasdaq rose 45.71 to 2308.22, and the
S&P 500 lifted 21.75 to 1267.61.
Top sectors included biotechnology
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up 6.8%, gold and silver
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5.0%, Internets
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3.8%.
While most sectors were higher, the
semiconductor index
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session.
Leading the the red hot biotech index
were Vertex
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up 8%. Related biotech high-flyer of the day was Abgenix
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7 1/8 to 37 7/16.
Oral arguments got underway in the
Microsoft appeals process, and some analysts feel there is a chance that a
review of some of the controversial judicial remarks off the record could help
weaken the Government’s case for breaking up the software giant. Microsoft
closed up 2 3/4 to 59 9/16.
Joining Microsoft as top Dow
performers were Home Depot
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Motors
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The big economic news tomorrow is
February’s consumer confidence report which is due out at 10:00 AM ET. Analysts
expect a reading of 112.0 which would be down from last month’s 114.0.