Market Gives Back Some Early Gains, But Still Closes Higher

I didn't get a chance to post a morning update today, but you can bet that I would have mentioned that I am always skeptical of strong market opens. And lo and behold, after midday, the market had given back all of those early gains.

Fortunately, a late day rally helped the indexes finish in positive territory. Energy led the way, up +1.98%, followed by semis +1.02%. Biotechs lagged the most, -2.17%, followed by banks -0.92%.

The market peaked when Ambac (ABK) was halted pending news. The rumors were that a major bailout that had been in the works for weeks would finally materialize. When the announcement came that all they were doing was raising some capital, the stock sold off sharply, and much of the air came out of the stock market.

One of the big surprises on the day was the sharp turnaround in oil and gold. Yesterday, I showed the charts of the big reversal that took place in those commodities. So today, I would have expected either some follow through on the downside, or maybe a small rally.

Instead, both of these commodities came roaring back, and went on to make new highs. That helped energy stocks soar, gold stocks spike, and agric and solar stocks to come back strong also.

The fact that the S&P 500 held the 1320 level over the last few days is an incremental positive. But the proof is in the pudding, and it remains to be seen if the index can rally through any major resistance levels, like its downsloping 50-day average.