After repeatedly banging their heads against the S&P; 500’s 1,130 resistance level, the bulls finally broke through this proverbial glass ceiling yesterday with a bang.
It wasn’t even nip and tuck; it was a clear break out of the trading range, with the major indexes surging to their highest level since May. It was surprising to see the market move higher with this much vengeance the day before the Federal Reserve meeting on interest rates, where usually subdued trading is the theme of the day.
Supporting upward momentum were a number of things with one being Lennar homes, which surprised with better than expected earnings offsetting a weak report on home building conditions.
The other good news was that the recession, which began in December 07, was now officially declared to have ended in June 09, according to the National Bureau of Economics (NBER) that dates these kinds of events.
As a consequence, the much talked about potential double-dip recession is now no longer alive, since any new economic slide will be considered a new recession. I am so glad to hear that we have institutions that clarify those types of things for the rest of us…
All major indexes are now trading above their respective 200-day moving averages by about 2%. The S&P; had been riding the range between 1,010 and 1,130 since the end of May before yesterday’s breakout.
We’re continuing to conservatively participate in this rally knowing that Wall Street is capable of climbing a wall of worry; a quick reversal could occur at the drop of a hat if economic assumptions do not turn out as well as anticipated.
Chart courtesy of MarketWatch.com