Bulls continue to dominate as investors continue to shake their head as "all systems go, pedal to the metal" Ben Bernanke's decision yesterday still has many scratching their head. The action today was fine, after a huge move in September and big rally yesterday indexes churned sideway in day 1 of working off the overbought conditions. Just as we said early last week, if we can see a few days of this type of sideways action it can set up a new leg up. This was only the 2nd day of the month the S&P 500 was down - it's been that remarkable of a run. The S&P 500 fell 0.18% while the NASDAQ gained 0.15%. In economic news:
Existing home sales gained 1.7 percent to an annual rate of 5.48 million units in August, hitting a 6-1/2 year high, according to the National Association of Realtors. Economists polled by Reuters had expected a 5.25 million-unit rate. The Philadelphia Federal Reserve Bank said business activity in the U.S. mid-Atlantic region jumped to 22.3 in September, increasing by the most in more than two years, blowing past expectations for a reading of 10.0. Any reading above zero indicates expansion in the region's manufacturing.
Here are the long term charts for the indexes - you can see how "vertical" this move has become; very similar to the intense action in July:
Bernanke's move helped to crush volatility as the VIX index is now in the 13 range.
At this point nearly every individual stock of merit is quite overbought so it is difficult to post any attractive charts for entry. We'll just point out some big winners.
Tesla (TSLA) one of the 4 horsemen of this rally, had a monster session, after it was upgraded. This has been the stock of the year.
...analysts at Deutsche Bank late the prior day raised the price target on the electric-car maker by 25%, citing strong demand in the U.S. and Europe. The analysts lifted the price target to $200 a share, up from $160 previously. "As Tesla continues to execute to margin targets and demonstrate strong demand for their product, confidence in the late-decade volume, margin, and earnings estimates that justify upside to the current valuation will likely grow," the analysts said.
YY (YY) which is a Chinese social internet stock, had a fine session - we are starting to see some extreme signs of fervor in this group - anything social media, whether domestic or overseas, is getting a lot of money thrown at it.
3D printer, 3D Systems (DDD) which we have highlighted plenty of times this year, also broke to a new 52 week high.
SentimenTrader had some interesting comments on the strength of this move yesterday:
Wednesday capped one of the strongest runs to a new high we've ever seen in the S&P 500. With Wednesday gaining more than 1%, and being the largest gain in the past three weeks, with no losses greater than -0.35%, there have been only 6 precedents since 1928. Over the next 2-3 weeks, all of them pulled back, but none of them marked a major high. The dates were 9/13/55, 1/30/61, 3/15/71, 12/18/92, 10/14/93 and 10/4/96.