Rally continues pushing stocks to 18-month highs helping confirm the SPX's break of 1,500. The Dow (DJI) closed the session with a gain of 47.69 points to 10,733.67. The S&P 500 (SPX) added 6.75 points to 1,166.21 with the Nasdaq (COMP) tacking on 11.08 points to 2,389.09. Volume remained on the light side at 1.02 billion shares on the NYSE and 2.22 billion shares on the Naz. Market breadth was positive by a 22-to-9 and 16-to-11 margin on the Big Board and Naz respectively.

Stocks have been on the rise the past few weeks with the Dow actually gaining ground for seven straight sessions. Gains picked up Tuesday following the FOMC statement, which helped push the SPX above key resistance at 1,500. With the Fed expected to keep rates low for an extended period of time, the bulls have incentive to buy. One caveat is the move of the CBOE Market Volatility Index (VIX) to support near 17.50.

In economic news, producer prices fell 0.6 percent in February when analysts were looking for a decline of just 0.2 percent. The core rate rose an as expected 0.1 percent, putting the year on year gain in the core at 0.9 percent. The headline year on year rate is much strong at 4.6 percent thanks to gains in energy prices. Overall, this data allows the Fed to keep rates low and this benefited the stock market.

Oil prices firmed on the session following reports OPEC would keep quotas where they are. Crude rose $1.23 a barrel to close the session at $82.93 despite news that oil inventory levels this past week rose by one million barrels. Oil related stocks gained ground Wednesday with the Oil Services HOLDRs (OIH) up 0.59 percent to $128.52.

Fed Chairman Ben Bernanke spoke on Capitol Hill today telling lawmakers that he is not in favor of the proposed changes in banking regulation. Mainly, he is referring to talk of stripping the Fed of its oversight of smaller banks. The Senate bill has other divisions, including the FDIC, as the overseers of smaller financial institutions, but Mr. Bernanke and former Fed Chairman Paul Volcker both do not agree.

Thursday's session will likely trade on economic news with several reports on tap. Data on consumer prices, jobless claims, leading indicators and the Philly Fed Survey are all scheduled. However, as long as data doesn't disappoint, the general feeling is that stocks will continue to gain. Nonetheless, with fear so low, we can't rule out profit taking on bad news.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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