Explosive Breakout Possible; Buy on Pullbacks
by Sam Collins 09/11/09
Free Trading Guides
At the start of trading on Thursday, following four days of gains, profit-taking would be the dominant theme. But after just a few minutes of scalping, the market turned and made a steady, plodding advance to the close.
The three major indices all closed at new highs for the year, with Nasdaq (NASD) the leader, up 1.2%. The Dow Jones Industrial Average (DJI) gained 0.8% and the S&P 500 (SPX) was up 1%. The gains were impressive, with the highest volume in several weeks.
The advance was in part due to lower-than-expected jobless claims. And the trade deficit, which was more than the expected $32 billion, didn't seem to put a damper on trading.
Treasury Secretary Geithner's testimony before Congress was cited as a major reason for some of the buying.
He said, "Policymakers are in a position to evolve their strategy with the goal of repairing and rebuilding the economy's foundation for future growth." He also said that it is unlikely more bank bailout money will be needed, so its contingency provision can be removed from the budget.
Telecom stocks were strong, up 2.1%. But the sector leader was clearly airlines, with the index up 6.7%, mostly due to an upgrade of UAL Corp. (UAUA) by JPMorgan (JPM).
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