US stocks melt up on earnings, housing data; GASL gains, VXX drops

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US stocks continued with their winning streak for the third straight day Thursday as better-than-estimated housing data overshadowed concerns over a weak job market and mixed corporate earnings readings.

The S&P 500 index topped the 1,400 mark in intraday trading for the first time in three weeks as software company Citrix Systems raised their 2012 outlook. Yields on seven-year notes dropped to a record low at a $29 billion auction today, snapping decline for the first time in three days as the US Federal Reserve pledged to keep interest rates low through 2014.

The Dow Jones Industrial Average (DJIA) rose 0.9 percent, its third straight day of gains after discount retailer Wal-Mart (WMT) rebounded following its eight percent drop this week.

The S&P 500 Index (SPX) went up 0.7 percent, after hitting 1402.09 in intraday trading. Telecom and consumer discretionary like home builders advanced the most as pending home sales rose 4.1 percent in March against an estimated 0.5 percent growth, while health care and materials declined among the 10 industry sectors.

The NASDAQ Composite Index (COMP) added 20.98 points, up 1.7 percent over last Friday, to settle at 3050.61.

Higher than estimated jobless claims triggered speculations for another round of asset purchases by the Federal Reserve, driving yields down. Earlier in the day, Treasuries had advanced amid concerns that the ongoing European crisis may widen, spurring demand for safety.

Benchmark 10-year yields settled at 1.94 percent after touching as low as 1.93 percent during the day’s trading, while yield on 30-year bonds slipped 3 basis points to 3.12 percent.

ETFs in the news 

ETFs linked to natural gas saw a steady run today with the Direxion Daily Natural Gas Related Bull 3x Shares topping the charts. The gain for unlevered products was a little muted with the iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) rising 3.11 percent on the day.

However, GAZ had a roller coaster ride this year, mainly due to its high premium.  While ETFs like First Trust ISE Revere Natural Gas Index Fund (FCG) have less volatility, they are also stuck on the bearish side of the trend line meaning upward momentum needs to kick in strongly before FCG becomes a worthwhile consideration.

As pending home sales data jumped 4.1 percent in March, homebuilder-tracking products like the iShares Dow Jones U.S. Home Construction Index Fund (ITB) showed strength, rising 3.65 percent for the day. This is ITB’s third straight day of gains and the ETF is heading towards 2012 highs.

Among the day’s top losers, the 3X leveraged Direxion Daily Semiconductor Bear 3X Shares tumbled 6.95 percent as the Semiconductor Index rose on higher 2012 revenue guidance from Citrix Systems.

The so-called fear-tracking iPath S&P 500 VIX Short Term Futures ETN (VXX) continued to march south as all the three indexes closed in the positive territory. The VIX index tracking ETF slumped 3.51 percent, heading towards April lows.

Our Trend Tracking Indexes (TTIs) headed north. For more details, please see the StatSheet, which I will post a little later on.

Disclosure: No holdings

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