Stocks Follow Through With More Gains

Another boatload of upbeat economic data from China and progress toward a diplomatic resolution of the situation in Syria fed the spirit of risk aversion which helped stocks achieve huge gains on Monday.

The Dow Jones Industrial Average (DIA) gained 127 points to finish Tuesday’s trading session at 15,191 for a 0.85 percent surge. The S&P 500 (SPY) climbed 0.73 percent to close at 1,683.

The Nasdaq 100 (QQQ) advanced 0.48 percent to finish at 3,185. The Russell 2000 (IWM) jumped 0.92 percent to end the day at 1,055.

In other major markets, oil (USO) sank 1.55 percent to close at $38.33.

On London’s ICE Futures Europe Exchange, November futures for Brent crude oil fell $2.19 (1.95 percent) to $110.14/bbl. (BNO).

December gold futures fell $23.20 (1.67 percent) to $1,363.50 per ounce (GLD).

Transports were flying higher than the Space Station on Tuesday, as the Dow Jones Transportation Average (IYT) soared 2.14 percent.

In Japan, stocks surged following Monday’s “relief rally” in the United States, resulting from progress toward a diplomatic resolution to the Syrian situation. The nation’s shipping sector surged after the Baltic Dry Index jumped 9.32 percent – its most significant advance in four years. The Nikkei 225 Stock Average jumped 1.54 percent to 14,423 (EWJ).

China’s National Bureau of Statistics reported that in the month of August, the nation’s industrial production increased 10.4 percent from August of 2012, beating expectations of a 9.9 percent increase. The nation’s use of electricity increased by 4.02 percent from July and by 13.4 percent from August of 2012. Investment in real estate increased by 19.3 percent during the first eight months of 2013 compared with the same period in 2012. Revenue from property sales soared 34.4 percent from January through August. Retail sales rose 13.4 percent during the first eight months of the year, beating expectations for a 13.3 percent rise.

The Shanghai Composite Index jumped 1.15 percent 2,237 (FXI). Hong Kong’s Hang Seng Index soared 0.99 percent to end the session at 22,976 (EWH).

In Europe, stocks made a strong advance following the news on the situation in Syria (NYSEARVA:VGK). The automotive sector had a strong day, with Volkswagen AG skyrocketing 4.1 percent and Peugeot surging 1.8 percent. The Euro STOXX 50 Index finished Tuesday’s session with a 1.90 percent jump to 2,851 – climbing further above its 50-day moving average of 2,750. Its Relative Strength Index is 53.96 (FEZ).

Technical indicators revealed that the S&P 500 climbed further above its 50-day moving average of 1,668 after finishing Tuesday’s session with a 0.73 percent advance to 1,683. Although a head-and-shoulders pattern appeared on the S&P chart, from the period beginning in early May through September 6, the S&P has now broken the neckline of the pattern. (There had been a pinhead-and-shoulders pattern running from the period beginning on July 10 through August 16 and the S&P would have to rise above 1,695 to break the neckline of that pattern.) Its Relative Strength Index jumped from 55.93 to 60.47. Although the MACD is below the zero line, it is continuing upward, after crossing above the signal line on Monday, suggesting a further advance.

For Tuesday, all sectors were in positive territory. The industrial sector led the group with a 1.43 percent advance.

Consumer Discretionary (XLY): +0.97%

Technology: (XLK): +0.62%

Industrials (XLI): +1.43%

Materials: (XLB): +0.90%

Energy (XLE): +0.04%

Financials: (XLF): +1.17%

Utilities (XLU): +0.78%

Health Care: (XLV): +0.63%

Consumer Staples (XLP): +0.10%

Bottom line: Progress toward a diplomatic resolution of the situation in Syria combined with comforting news about China’s economy to keep investors in a bullish mood, sending stocks higher on Tuesday.

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