Just when it looked like everything was breaking down, stocks screamed higher on Wednesday. If you have been trading these markets, this probably comes as little surprise. It seems as if the best trade out there right now is to do the exact opposite of what logic may dictate.
The indices did a bang-up job of erasing near-term oversold conditions during the course of the trading day. The rally appears to have materialized out of - one part thin air, one part short covering, and one part slightly better than expected economic reports. This entire move was foreshadowed at the close yesterday when the futures screamed higher on massive volume after a flat finish on the cash equities market. Very bizarre happenings...
The SPDR S&P 500 ETF (NYSE: SPY) rocketed 2.99% higher to close at $108.46. Volume was on the heavier side with around 258 million SPY shares trading hands versus a 3-month daily average of a little more than 230 million. The bears have been highlighting the light volume up days, but on Wednesday that was not the case. This is something to take into consideration.
The PowerShares QQQ Trust ETF (NASDAQ: QQQQ), which tracks the performance of the Nasdaq 100, gained 2.99% to $44.76. Volume was right around the 3-month daily average for the heavily traded ETF. Year-to-date, the quad Q's have lost 2.16%.
Gold languished on Wednesday as equities surged. COMEX gold futures lost $4.50, or 0.36%, to $1,245.80. The SPDR Gold Trust ETF (NYSE: GLD) lost 0.32% to close New York Stock Exchange trading at $121.69.
The crude oil market continues to be incredibly volatile and rallied along with stocks during the trading session. NYMEX crude futures surged 2.85% to $73.97. The United States Oil Fund ETF (NYSE: USO) climbed 3.23% to $32.95. Continue to monitor this market closely. Look for strength in the crude market to provide confirmation that a sustainable equities rally is underway.
Predictably, Treasuries got hammered on Wednesday. Being long Treasuries has been THE trade recently, but the bulls got hurt today. The iShares Barclays 20+ Year Treasury Bond ETF (NYSE: TLT) fell 2.36% to $106.00. The yield on the 10-Year note jumped 9.77 basis points to 2.573%. This is also a market to keep a laser focus on. The calls for a top have been coming one after another, and eventually there WILL BE a top, so pay attention.
The Dollar was weaker on Wednesday which definitely helped to supercharge equities. The PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP), which tracks the performance of the dollar against a basket of foreign currencies, slid 0.79% to $23.93. The closely watched EUR/USD pair is currently trading at $1.2811.
-
