Yesterday's late-day rally came despite another warning from Standard & Poors that a downgrade could be imminent for the European Union and for European banks. A report, which was later denied, that the G20 was planning a $600 billion lending facility for Europe sparked the rally.
On the corporate front, Boeing (BA) is set for a higher open this morning after employees in three states agreed on Thursday to a new four-year contract. Costco (COST) on the other hand, announced that net income rose 2.6% with 10% higher comparable sales and is opening lower due to missed expectations.
Technically, the major indices and many stocks are forming bull flag patterns that suggest higher prices to come. The market has not seen a major pull-in after blasting off last week. The financials have always been key to any sustained rally, and yesterday's action was promising for the bulls. Goldman Sachs (GS) led the charge, breaking out of its flag ahead of the market.
Tech has been a mixed bag with some divergences emerging, but one name that looks to have taken over some leadership in the sector is Google (GOOG). Although the company was relatively week yesterday, it is flagging in front of 52-week highs, and should blast off if the market continues to be strong.
Although today's open is promising for the longs in this market, do not get ahead of yourself. This market remains driven by headlines, and technical patters have not always panned out.
*DISCLOSURES: Scott Redler is long LVS, NFLX, SLV, SPY, MGM, SINA, GOOG, JPM, XLF, OIH, POT.
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