Stock Market Update -Feb 21st

The market rallied for the second week in a row as we cleared the 1100 level in the S&P500, and cleared the previous high reached on Feb 2nd (see chart). Friday was options expiration day, and once again all the 'put' buyers on the indexes were left holding the bag! (there was a huge bias to the 'put' side). Maybe now we will see a move lower?

The Fed raised the discount rate in a surprise announcement on Thursday, but so far it has had little effect on the equity market. Meanwhile the debt clock has now passed the $12.5 trillion mark! Meanwhile Gold has broken out past the November highs in the Euro currency.

After reporting earnings this week, HPQ was up while DELL was down. FSLR also dropped.

Stocks hitting ALL TIME HIGHS this week: BIDU, CY, DNDN, GIS, NFLX,

New unemployment claims were up, coming in at 473,000.
And four more banks were shutdown this week! (list).

Next week: Earnings season is almost over, but this week includes reports from BRCD, DNDN, LOW, HD, NEM, NTES, ODP, SHLD, TGT, TSL, and PBR. The week also includes economic reports on consumer sentiment, GDP, and housing. In addition, the government will borrow another $118 billion via Treasury auctions.

Market commentary: The market regained strength this week and may have started another 'up' leg -we'll find out shortly. If it can get past this area of congestion, we will likely see 1150 on the S&P500 again, otherwise we will likely go back down to test the 1044 level -quite a range! The latter scenario will likely play out if the Dollar continues to gain strength.

Commodities:
Oil prices were up, closing the week around $80 per barrel.
Natural Gas continued to drop, closing around $5.00.
Gold prices were up, closing around $1121.
The US Dollar index was up, closing around 80.76.
30 year Bond prices fell to around $116 as the stock market rallied.

News:
U.S. Stocks Gain Most Since November on Factory Orders, Profits
Fed’s Bernanke to Assure Congress Higher Rates Not Imminent
States short $1 trillion to fund retiree benefits
Obama Takes Deficits To New Frontier
Millions of unemployed face years without jobs
Getting Back Lost Jobs Could Take 5-Plus Years

Dollar Rises for Sixth Week Versus Euro After Fed Rate Increase
Tepid inflation gives Fed room to keep rates low
U.S. Mortgage Foreclosures Rose in Fourth Quarter
Coming Soon: 5 Million More Foreclosures
Insolvent European vs American States
The PIGS Problem Has Portents for the Euro 8 comments