Major averages were up on mixed volume yesterday as financials led the way with strong upside moves following the announcement that 29 of 30 large banks passed so-called "stress tests." It is not clear how meaningful such tests are since the only bank that failed the test, Zions Bancorporation (ZION) rallied sharply as well.
Economic reports came in strong with the Philadelphia Fed survey at the top of the range pf estimates as well as leading indicators for February ahead of consensus. This fuels the Fed's position that interest rates will move up sooner than later due to a strengthening economy. Major averages have been moving sideways for a couple of weeks. Which way they break will depend on the market's view of diminishing quantitative easing and rising interest rates vs. a recovering economy.
Most leading stocks continue to pull back and correct and if the market trend is set to resume its upside movement we might expect to see some of these names start to flash pocket pivots or other constructive action off of key levels of support as they pull back, whether that is at the top of prior bases or a major moving average like the 50-day.
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