Picking up on the positive momentum from 2010, the markets welcomed 2011 yesterday with their biggest rally in nearly a month. For most of the day, it looked like a triple-digit pop in the Dow, but a last hour fade took back nearly a third of the gains.
Nevertheless, the rally was broad with most sectors participating. Commodities moved higher along with Crude oil, which topped $92/barrel for the first time since late 2008. Gold slipped slightly, the dollar was flat, and interest rates inched up causing bonds to slip just a bit.
Asia and Europe led the markets, and the domestic indexes followed along right after the opening bell as the chart above (courtesy of MarketWatch.com) shows.
Some economic reports, while not earth shattering, helped the bullish cause. Manufacturing strengthened in December, and better-than-expected construction spending in November cheered traders on Wall Street.
While this was a good start to a new year, we’ll have to wait and see if this upward momentum can be sustained once some of last year’s issues move back to the front page again. The market indexes are hovering around very lofty levels and have moved substantially above their respective long term trend lines.
Let’s hope that this picture does not end up in the “pop and drop” syndrome, which can be frequently observed once markets have moved up too far and too long without any correction.
Right now, however, we’re off to a good start, so let’s enjoy it for the time being.