The market recovered from early selling and fought back to positive territory Thursday, once again showing resilience but not much momentum. The S&P finished up 3 points, or 0.23%. Stocks have so far held the gap up from Tuesday, much in the same way they held the New Years gap before Tuesday's overnight gains.
Commentators have largely credited improving US economic data for sparking the market's rise over the past month, with the weak Euro providing a headwind, but today those two factors saw a role reversal. Futures were set for a much higher open this morning before jobless claims rose unexpectedly and retail sales growth did not meet expectations in December. However, strong debt auctions in Spain and Italy boosted the Euro, fostering optimism that the beleaguered currency can remain viable.
Beaten down, oversold stocks continue to perform among the best in the market in 2012. The likes of Bank of America (BAC) (and the banks in general), Netflix (NFLX), solar stocks, and US-listed small cap Chinese stocks, to name a few, have been strong, and today we had another one join the club: Research in Motion (RIMM). Takeover talk, which has been rampant over the past year, re-surfaced for the struggling mobile-device maker, and the stock gained 5.3%.
Volume DOES remain light the action is so far unconvincing, so it is important for traders and investors to remain on their toes. While the technicals point to further upside, we must remember how quickly things can change in this thin, volatile market that reared its ugly head in the 2nd half of 2011.
*DISCLOSURES: Evan Lazarus is long RIMM, LULU calls. Short LULU stock, REGN. Scott Redler is long SPY, X, POT, NFLX, QCOM, MCP, DANG, RENN, LNKD, OIH, GNK, CSCO, GOOG calls. Short DIA. Marc Sperling is long VXX, AMZN, GS, MCP, JKS, YGE, GRPN, CSIQ, FIO.
