Happy New Year! Stocks opened sharply higher this morning with the Dow Jones Industrial Average (chart) surging over 200 points, the S&P 500 (chart) +23 points, the Nasdaq (chart) +60 points and the Russell 2000 (chart) +18 points.
The S&P 500 (chart) for the first time in over two months is trading over the 1280 mark which is the breakout point that certain market technicians have been looking for. Before anyone gets too excited though, it is not uncommon for stocks to lift in the first couple of days of the trading year. Personally, I would like to see at least a week of the 1280 level of the S&P to hold before I am convinced that this is a true breakout. Furthermore, we are heading right into fourth quarter earnings reporting season which should also confirm whether or not this is truly a market breakout.
As far as volatility is concerned, chances are that we are in for a similar pattern as we experienced in 2011, which was breathtaking. There are still far too many uncertainties that lie ahead which includes the ongoing saga out of Europe, our own economy, corporate profits, and of course the 2012 Presidential elections here at home. Nevertheless, this should be a very exciting year for the bulls and the bears, however, whichever camp you are in, make sure to always use protective stops on all of your positions. Good luck to all and Happy New Year 🙂