Posted on Thursday, November 29th, 2012 | In Exchange Traded Funds
An upbeat report on Pending Home Sales, declining initial unemployment claims, and investor optimism about the budget negotiations boosted stocks.
Investor optimism continued on Thursday after the National Association of Realtors reported that Pending Home Sales during October rose to the highest level in five years. The Department of Labor reported that initial unemployment claims dropped below the 400,000 level to 393,000. The good news reinforced investors’ hopes that the budget negotiations could be resolved in time to avoid the fiscal cliff.
As of 3:08 EST, the Dow Jones Industrial Average advanced 37 points (0.29 percent) to 13,022. The S&P 500 Index climbed 0.46 percent to 1,416 – staying below its 50-day moving average of 1,422 and above its 200-day moving average of 1,384 (NYSEARCA:SPY). The S&P 500 chart exhibits an inverse head-and-shoulders pattern (see green bar on chart) which suggests that the index could make a further advance. The 50-day moving average of 1,422 is an important resistance point for the S&P. If the S&P breaks past 1,422 it could quickly make more progress (Chart courtesy of Stockcharts.com) The Nasdaq Composite advanced 0.61 percent to 3,010 (NASDAQ:QQQ). The Russell 2000 Index jumped 1.14 percent to 822 (NYSEARCA:IWM).
The “Dollar Bull” Index ETF (NYSEARCA:UUP) declined by 2 cents (0.11 percent) to 21.94 as of 2:44 EST.
As of 2:49 EST, the S&P 500 Volatility Index – or VIX – declined 2.77 percent to 15.08 and the VIX Short-Term Futures ETN declined 1.56 percent to 28.98 (NYSEARCA:VXX). VIX ETFs Fall Off Own Fiscal Cliff
The major European stock indices made huge advances on Thursday following the European Commission’s “Blueprint on a Deep and Genuine European Monetary Union” and the EC’s positive Economic Sentiment Indicator for October. The Euro STOXX 50 Index finished Thursday’s trading session with a 1.37 percent advance to 2,581 – staying above its 50-day moving average of 2,509 (NYSEARCA:FEZ). The FTSE 100 Index rose 1.24 percent to 5,875 (NYSEARCA:EWU). The German DAX Index advanced 0.78 percent to 7,400 (NYSEARCA:EWG). France’s CAC 40 Index climbed 1.53 percent to 3,568 (NYSEARCA:EWQ). Spain’s IBEX 35 Index surged 1.61 percent to 7,963 (NYSEARCA:EWP). Italy’s FTSE MIB Index skyrocketed 2.65 percent to 15,862 (NYSEARCA:EWI).
As of 2:57 EST, the euro advanced 0.16 percent against the dollar, trading at $1.2974 (NYSEARCA:FXE).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced by $1.15 (1.05 percent) to $110.66/bbl. (NYSEARCA:BNO, NYSEARCA:USO).
SPDR Dow Jones Industrial Average ETF (NYSEARCA:DIA) +0.29% as investor anxiety about the fiscal cliff negotiations eased after the release of the surprisingly positive report on Pending Home Sales for October.
SPDR EURO STOXX 50 ETF (NYSEARCA:FEZ) +0.89% following the release of the European Commission’s “Blueprint on a Deep and Genuine European Monetary Union” and the EC’s positive Economic Sentiment Indicator for October.
Vanguard REIT ETF (NYSEARCA:VNQ) +0.47% following the better-than-expected report on Pending Home Sales for October.
iShares Barclays 20+ Year Treasury Bond Fund (NYSEARCA:TLT) +0.04% as the ongoing fiscal cliff negotiations motivate investors toward bonds, despite advancing stock prices. Learn More About iShares ETFs
SPDR S&P 500 INDEX ETF (NYSEARCA:SPY) +0.40% as investors feel confident about budget negotiations. Some Stocks that May Be Ready for Bigger Upside Moves
Bottom line: Investor optimism was boosted on Thursday by the October report on Pending Home Sales as well as the decline in initial unemployment claims. The good news fed hopes that the budget negotiations would be resolved in time to avoid the fiscal cliff.
About John Nyaradi (http://www.wallstreetsectorselector.com)
John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.