Stocks ripped higher for no reason at all, which tends to paradoxically be the best type of advance, notes Jon Markman, editor of Strategic Advantage.
No news is good news.…In our biweekly deep dive on tech, you will learn the best way to invest in semiconductors might be through software companies that design them.
Observations: Bears capitulated early Wednesday and stocks shot higher. Persistent buying sent the S&P 500 (SPX) to 4,155, a closing gain of 1.6%. The rally Wednesday erases all of the losses in the early part of the week.
It also puts the benchmark S&P 500 within easy striking distance of critical overhead resistance at 4,175. That level represents the cluster of highs from May and June. Any close above 4,175 would be a significant loss for bears and lead to more intense covering and complaining.
The next important resistance level would be 4,340, the 200-day moving average. Bears are now running scared. Sentiment is shifting in favor of bulls as buyers swoop in to buy bad news.
Executives at Advanced Micro Devices (AMD) lowered guidance for the remainder of 2022 on Tuesday, yet shares lost only 1.2% during Wednesday’s session, closing well off the opening low.
While resistance for the S&P 500 looms at 4,175, I recommend retaining a bullish stance as bulls have tremendous momentum on their side and all the bears have is hope that something goes wrong Critical support is 3,990.
SA TradeView: No current positions. I’m being cautious as the indexes approach key resistance levels even though we lean long. It is simply a matter of finding a low-risk entry level. We could potentially announce a new play during the Thursday session, so keep an eye out.
The BackStory: The Dow (DJI) climbed 1.3% to 32,812.50 and the Nasdaq (IXIC) rose 2.6%.
All sectors posted gains, with only energy in the red. Technology (XLK) was the best performing sector, and Software (XSW) was the leader among tech, +4%. Semis (SMH) was +2.4%....In factor land, SPDR S&P 500 Growth ETF (SPYG) beat the SPDR S&P500 Value ETF (SPYV) by a mile, 2.3% to 0.8%.
Breadth favored advancers three-one, and there were 55 new highs vs 68 new lows. This is still really surprising data and it shows how far we still are from a bull market. The leaders were Brown-Forman (BF-B), VICI Properties (VICI), Alnylam Pharmaceuticals (ALNY), Jack Henry & Associates (JKHY), and Aspen Technology (AZPN). JKHY and AZPN are among my all-time favorite stocks; great to see them crushing it.
The Institute for Supply Management's US services index rose to 56.7 in July from 55.3 in June, compared with expectations for a decline to 53.5 in a survey compiled by Bloomberg. The prices paid index declined but still indicates rapid price acceleration.
The S&P Global nonmanufacturing index was revised slightly higher in July to 47.3 from the flash 47 estimate but was still below the 52.7 reading in June.
New orders for US factory goods rose by 2% in June, ahead of expectations for a 1.9% increase in a survey compiled by Bloomberg and following a 1.8% gain in May. Factory shipments rose by 1.1% and factory inventories increased by 0.4%.
St. Louis Federal Reserve President James Bullard told CNBC Wednesday that he doesn't think the US has entered a recession.
The US ten-year yield rose 2.5 basis points to 2.72% after touching its lowest level since early April on Monday. West Texas Intermediate Crude fell 3.8% to $90.81 a barrel.
In company news, Moderna (MRNA) maintained the 2022 sales guidance for its Covid-19 vaccine despite a pullback in deliveries to a global vaccine-sharing initiative after the drugmaker's second-quarter results beat estimates. Shares surged 16%, the most on the S&P 500 and Nasdaq 100.
The second-biggest performer on the two indices was Paypal (PYPL), with shares up 9.3% after the firm reported a drop in adjusted earnings to $0.93 per share in the second quarter from $1.15 a year ago but still beat the $0.87 consensus.
Match Group (MTCH) reported a second-quarter loss of $0.11 per share, reversing earnings of $0.46 per share a year ago and missing expectations for earnings of $0.53 per share. The stock plunged 17.6%, the worst performer on the Nasdaq 100.