Citigroup's government bailout sparked a rally in financials while the weak dollar led to strong commodity prices and higher oil. The oil stocks and commodity stocks flew as did the bulk of the market. There only seemed to be good news in the air as President-Elect Obama named his economic team and showed his urgency to get the economy back on the right path.
Stocks were up all day and got stronger in the last hour before fading a little at the close. The volume was decent but not spectacular. The various markets are up 10-12% in the past two days and will likely need to take a breather in the next day or so. Even the weak existing home sale numbers couldn't keep the home builders down today.
Tomorrow's economic reports will certainly fuel the volatility for stocks as we get 3rd quarter GDP, Case/Shiller home prices, consumer confidence, and the Richmond Fed Manufacturing Index. The strength of the market will surely be tested by the negative numbers we should expect to see.
Gold is now over $800. The weak dollar is driving the momentum in the short-term but the government's debt burden keeps growing with each new bailout. This leveraged U.S. balance sheet and the growth of the monetary base will surely lead to a much higher price of gold in the future.
Today was easy to pick stocks as almost everyone went up. Not everyday will be like this as the bad can't always rise with the good. Keep sticking with quality and the future will be bright.
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