Commentary and Performance

Today’s positive economic data out of the USA and Europe combined with central banks’ global coordination to “stimulate” their economies gave stocks another boost. The SP-500 closed @ 2017.15 (+22.64 / +1.10%) and the Nasdaq-100 settled @ 4624.09 (+120.87 / +2.68%). Small caps continue to struggle with clearing key resistance levels despite their positive performance. The Russell-2000 finished the day@ 1166.08 (+11.54 / +1.00%). The Dow Jones averages delivered the following results: The DJ-30 Industrials @ 17646.70 (+157.54 / +0.90%); DJ-20 Transports @ 8295.58 (+56.65 / +0.69%); and DJ-15 Utilities @ 594.41 (-10.95 / -1.81%).

The VIX even participated in today’s market rally. If you don’t believe it, call Ripley’s. It closed @ 14.46 (+0.01 / +0.07%).

Perhaps the bond market, about the only honest asset class amongst a den of thieves, is giving the strength of the economy and the Fed some credit. Treasury rates reversed a two day decline with the 10-Yr @ 20.83 (+0.58 / +2.86%) and the 30-Yr @ 28.96 (+0.36 / +1.26%).

The US Dollar Index closed @ 97.04 (+0.59 / +0.61%). The dollar has established a new uptrend, but some price consolidation may be needed to sustain its rally. Don’t go chasing…

Gold has been down four out of the last five trading sessions. Today it closed @ 1162.80 (-3.10 / -0.27%). WTI Crude Oil has also been down four out of five days. Today it broke below its 22-day moving average to close @ 44.60 (-0.89 / -1.96%).

The Dow Jones Real Estate Index may be initiating a consolidation phase as it closed @ 297.32 (-2.80 / -0.93%). The Dow Jones Home Construction Index is testing resistance and has the potential to initiate a new short-term uptrend @ 596.00 (+4.40 / +0.74%).

Daily Chart Analysis

This rally is overextended and overbought. However, with strong momentum and short covering, I would not expect to see much resistance until we hit the bottom channel of the most recently broken uptrend. Price levels near 2100 will be where things get interesting and will make or break this rally.

Market Breadth

• Advancers (1972) vs. Decliners (910).
• New 5-day highs (1240) significantly lagged the number of New 5-day lows (488)
• New 52-week highs (291) also trailed new 52-week lows (170)
• Bullish reversals (202) lagged Bearish reversals (349)

Volume Radar Alerts

Stock prices increasing on high volume

• Athenahealth (ATHN) @ 163.37 (+27.54%) on 583% volume surge
• GNC Holdings Inc (GNC) @ 36.55 (+5.94%) on 368% volume surge
• CIT Group Inc (CIT) @ 46.14 (+15.70%) on 286% volume surge
• Envision Healthcare Holdings Inc (EVHC) @ 27.57 (+8.54%) on 343% volume surge
• Community Health Systems (CYH) @ 28.71 (+9.16%) on 318% volume surge

Stock prices declining on high volume

• Stericycle Inc (SRCL) @ 120.31 (-19.28%) on 996% volume surge
• Pandora Media Inc (P) @ 12.39 (-35.44%) on 995% volume surge
• Skechers USA Inc (SKX) @ 31.64 (-31.50%) on 815% volume surge
• Fortinet Inc (FTNT) @ 34.91 (-19.26%) on 765% volume surge
• VF Corp (VFC) @ 63.75 (-12.92%) on 717% volume surge

Market Moving Events

Bullish

• Economy / PMI Manufacturing / USA: The PMI Manufacturing Flash Index for October-2015 indicated a surprising surge @ 54.0 vs. consensus @ 53.0 and prior @ 53.0.
• Central Banks / Monetary Policy / China: The PBoC reduced interest rates by 25 bps to establish a benchmark lending rate @ 4.35%. China has cut rates 6 times now since November and is becoming more aggressive in its efforts to stimulate economic growth. It also lowered its reserve requirement ratio for large banks by 50 bps to 17.5%.
• Economy / PMI Composite Flash / Europe: Manufacturing and Services activity showed signs of strength for October-2015. European Union @ 54.0 vs. consensus @ 53.4 and prior @ 53.9;France @ 52.3 vs. prior @ 51.4; Germany @ 54.5 vs. prior @ 54.3;
• Real Estate / Residential / China: Existing Home Sales for September-2015 rebounded stronglyto 5.5mm vs consensus @ 5.35mm and prior revised @ 5.3mm. Month-over-month @ 4.7% vs. prior @ -5.0% and annually @ 8.8% vs. prior @ 6.2%, the report reflects a positive outlook for the housing market.
• Positive Earnings or Revenues / Technology: Amazon.com (AMZN); Alphabet/Google (GOOGL); and Microsoft (MSFT)

Bearish

• N/A

Neutral

• Economy/ Consumer / Europe: Italy’s Retail Sales during August-2015 were up 0.3% monthly and in-line with consensus @ 0.3% but below the previous month @ 0.4%. Annually, sales were up 1.3% vs. prior revised @ 1.6%.
• Economy / Inflation / Canada: Canada’s CPI contracted -0.2% monthly vs. consensus @ -0.1% and prior @ 0.0%. Annually, it grew 1% vs. consensus @ 1.1% and prior @ 1.3%.