Stocks Ride The Peace Train, Move Higher

Continuing progress toward a diplomatic resolution of the situation in Syria sent stocks higher on Wednesday. Despite the bullishness in the broader market, the entire tech sector was dragged down by Apple (AAPL) after its big promotional blitz for the rollout of its new iPhone models (5C and 5S) left a sour taste in the mouths of investors and consumers.

The homebuilding sector had a good day, as the iShares Dow Jones U.S. Home Construction Index ETF (ITB) skyrocketed 1.80 percent. The sector has been struggling due to fear that the taper of the Fed’s bond-buying will bring rising interest rates and reverse the housing market recovery.

The Dow Jones Industrial Average (DIA) gained 135 points to finish Wednesday’s trading session at 15,326 for a 0.89 percent surge. The S&P 500 (SPY) climbed 0.31 percent to close at 1,689.

The Nasdaq 100 (QQQ) declined 0.16 percent to finish at 3,179. The Russell 2000 (IWM) dipped 0.04 percent to end the day at 1,055.

In other major markets, oil (USO) advanced 0.38 percent to close at $38.48.

On London’s ICE Futures Europe Exchange, November futures for Brent crude oil rose 28 cents (0.25 percent) to $110.30/bbl. (BNO).

December gold futures advanced $1.20 (0.09 percent) to $1,365.20 per ounce (GLD).

Transports were stuck in traffic on Wednesday, as the Dow Jones Transportation Average (IYT) dipped 0.04 percent.

In Japan, stocks faded during the last hour of Wednesday’s session, after the Nikkei 225 spent most of the day above 14,500. The yen (now the yenny) strengthened from 100.61 to 100.47 per dollar, as the greenback weakened with the fading threat of an airstrike against Syria. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average managed to maintain a tiny, 0.01 percent advance to 14,425 (EWJ).

Although stocks made only a modest advance in China, the Shanghai Composite Index rose to its highest level since June 6, as the nation’s effort to avoid a credit crisis nearly doubled the amount of new credit during August. The Shanghai Composite Index advanced 0.15 percent 2,241 (FXI). Hong Kong’s Hang Seng Index declined 0.17 percent to end the session at 22,147 (EWH).

In Europe, stocks continued to advance following the news on the situation in Syria (NYSEARVA:VGK). The Euro STOXX 50 Index finished Tuesday’s session with a 0.42 percent advance to 2,863 – 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 1,669 after finishing Wednesday’s session with a 0.31 percent advance to 1,689. 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 rose from 60.47 to 62.23. The MACD just crossed above the zero line after crossing above the signal line on Monday. This move suggests the likelihood of a further advance.

For Wednesday, all sectors were in positive territory except for the tech sector, which was hit by a falling Apple and the utilities sector, which was spending money on lobbyists (ahem) to fight the recent regulations requiring installation of carbon control equipment on coal-fired power plants. Nevertheless, the energy sector led the group with a 0.76 percent advance.

Consumer Discretionary (XLY): +0.73%

Technology: (XLK): -0.46%

Industrials (XLI): +0.41%

Materials: (XLB): +0.61%

Energy (XLE): +0.76%

Financials: (XLF): +0.12%

Utilities (XLU): -0.98%

Health Care: (XLV): +0.67%

Consumer Staples (XLP): +0.71%

Bottom line: Stocks continued to advance as the likelihood of a diplomatic resolution of the Syrian situation increased on Wednesday, although Apple’s unsuccessful product launch caused the stock to drag down the entire tech sector.

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