Overnight news of a deal helped fuel optimism in the markets pushing futures higher. Buying started just after 9:45 as if it knew the Senate had come to an agreement on a bill. However, highs would be set before noon time and stocks coasted into the close. The House of Representatives still needs to vote on the measure, but it appears the US will not be defaulting any time soon. At least for a few more months as the current deal doesn’t solve any long-term issues. Despite the fear over the debt deal this market continues to push forward. The mess in Washington DC is simply noise and we must follow price and volume action in our stocks to make headway. Today was another good day in the markets and for those of us who continue to ride this wave higher.
Financials took a large step forward on the heels of BAC move higher today. XLF had been lagging and in danger of slipping into a downtrend. Today’s move along with the past few trading sessions has solidified this rally. BAC appears poised to break above September’s high and a move above that high would certainly be a good sign for the stock. BLK is another stock benefiting from its earnings report. It doesn’t matter how you interpret if earnings are good or not. Price action is the only thing that matters.
Slightly disappointing today was housing with the XHB barely up one percent on the day. NAHB survey of homebuilders dropped to a reading of 55 from a reading of 57. Expectations were for the index to hold steady at 57. Perhaps higher rates on mortgages and the fiscal fiasco created by Washington DC would appear to have homebuilders slightly concerned. While XHB was trying to make a comeback it continues to struggle with moving higher.
By the end of the evening we should have a vote on the deal struck in the Senate today. It’ll be interesting how this market reacts tomorrow. One day won’t make a trend, but can this market sustain this rally? All signs point that it can.
