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Stocks Continue Rally, Nasdaq Hits 13-year High; Financials Break Out

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Stocks Continue Rally, Nasdaq Hits 13-year High; Financials Break Out

Stocks in the US continued to move higher on the open following the strong rally seen on Tuesday. The rally was somewhat mixed as technology stocks led the broader markets higher pushing the Nasdaq composite up a robust 1.7%. Stronger than expected retail sales data, along with solid earnings from large cap banks have helped stocks regain some of their mojo.

Bank of America reported earnings $3.44 billion versus a net profit of $732 million for the fourth quarter of 2012. The bank reported a profit of $0.29, compared with the $0.26 a share expected by analysts. Revenue climbed 15% to $21.49 billion, compared with analysts’ expectation of $21.24 billion.

China Mobile (NYSE:CHL) received 1.2 million pre-orders for iPhone devices by this past Monday, indicating the level of demand for the product ahead of its sales launch by the carrier on Friday. Speaking in China, Apple (NASDAQ:AAPL) CEO Tim Cook said that even without an official agreement with China Mobile, iPhone sales hit a record high in Greater China in Apple’s FQ1.

General Motors’ (NYSE:GM) shares rose after the carmaker said it would distribute a quarterly dividend for the first time since June 2008. The $0.30-a-share payout equates to a 3% annualized yield based on yesterday’s current market prices.

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Financials (as reflected by the XLF ETF) made headway are poised to re-test the recent highs seen in the early part of January. With JPM, WFC and BAC all reporting solid earnings, financials are likely to continue to experience strong gains. Yields will eventually re-test the 3% level which should benefit banks as they borrow short term from the Fed and lend to consumers.

The XLF generated an inside day, which reflects the consolidation after Tuesday’s plunge. Momentum turned negative with the MACD (moving average convergence divergence index) printing in negative territory. The RSI edged higher printing near 58 which was the upper end of the neutral range.

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