Solid Retail Sales, Pending Home Sales Boost Stocks

After yesterday's outsized rally, the market is higher in early trading following some solid reports. In economic news, pending home sales rose +5.2% in July vs. expectations for no change. So that is a pretty solid report.

Also, same-store sales for the nation's retailers came in for the most part better than expected, and that is pushing the retail index (XRT) up +2.25% so far today, leading most ETFs. The homebuilding etf (XHB) is up +2.63% on the above-mentioned report.

Tomorrow is the monthly payrolls report, and expectations are for 120,000 jobs to be shed. This report always makes for volatile trading, especially ahead of the holiday weekend.

In Europe, eurozone GDP rose +1.0% in Q2, and the 2010 GDP outlook has been raised to 1.4% - 1.8%. The ECB also held rates steady at 1.00%.

Asian markets were also higher overnight, following the strong action on Wall St. yesterday.

The 10-year yield is rising further to 2.63%; oil is down a bit to $73.50, while gold is higher at $1248; and the VIX is -2.6% lower to 23.27%.

Trading comment: As the chart below shows, the S&P 500 rocketed off that 1040 support level right up to its 50-day average yesterday. This morning, the SPX has moved just above that 50-day line, and hopefully that moving average will act as support on any pullback.

The next looming areas of resistance will be the 1100 level, as well as the overhead 200-day moving average at 1115, which coincidentally is the same level at which we began the year. But as I wrote recently, focus on the stocks that are breaking out and leading the market. New highs expanded nicely yesterday, and that is a good sign.