-- Wednesday, November 4 --
BIGG INFLUENCE
Post-election sentiment and international rallies combine to motivate gains in all major U.S. indices.
Global market action during the last 24 hours owes some of its zigs and zags to an astonishingly localized source: Barton Biggs, a resource manager at Morgan Stanley Dean Witter. Biggs opined that Japan is "the next great trade," a shockingly bullish stance considering the country's dire economic state. Still, "buy low" and all that. Biggs increased his allocation of Japanese instruments by about 87 percent, and this demonstration of confidence catalyzed the Japanese Nikkei average upward by 4.1 percent.
Other countries continue to cut interest rates, lending momentum to global rallies, which add further fuel to the U.S. market. Why didn't the Dow experience a sharper rise, in light of these developments? It's worth remembering that the U.S. exchanges just finished the most productive month (October) of the decade. The next major move may depend on confirmation that the Federal Reserve will indeed, as widely speculated, lower lending interest rates later this month.
The Nasdaq diverged to the upside from the Dow today, gaining the historic equivalent of about 175 Dow points. Tech-sector enthusiasm is was demonstrated by gigantic Nasdaq volume today -- over one billion shares were traded on the exchange.
As to yesterday's election, investors feel that the surprisingly good Democratic showing reduces risk of a Clinton impeachment, a development that would certainly rock the financial universe.
SECTOR WATCH: Banks and brokers danced without restraint today, with J.P. Morgan leading the surge. Retail companies also rose, reflecting confidence in consumer confidence, so to speak. Small-cap companies, broadly speaking, did well today, rising 1.1 percent. Internet and computer manufacturers enjoyed the day. The Russell 2000 has risen a jaw-dropping 28 percent since its low on October 28.
TIDBITS: In the last few years, disk drive makers have tended to move as a group, like identical stock twins. There has been a drastic, synchronized devaluation of such companies for the past 18 months, as the market for storage devices has cheapened. Today, Hutchinson Technology (HTCH) reported earnings a few cents better (smaller loss) than expected, spiking the stock upward. Like sheep, Seagate, Quantum, and Western Digital followed the ascendant trail.
TECHNICAL ANALYSIS: What a difference a change in perspective makes. Looking at the Dow's daily chart reveals that the index has pierced its resistance level of 8,500. A glance at the weekly chart, however, indicates a different story, as the Dow appears to continue climbing out of a deep valley in pursuit of a resistance level of 9,000. which is true? Both. Every long-term trend is punctuated by short-term patterns. CHART: bradhill.com
LOOKING AHEAD:
Thursday: As earnings season winds down, look for Aetna (AET) to report quarterly numbers tomorrow.
Friday: Emplyment Report from the Bureau of Labor Statistics. 8:30 am EST. (http://biz.yahoo.com/c/terms/emp.html)
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