What A Relief Rally Looks Like

Stocks started strong yesterday and did not look back. It’s called a “relief rally,” a day when traders are relieved to see no more bad news hitting the market and decide it is safe to buy.

The Nasdaq (INDEX:COMP) led the way, up 2.73% or 128.01 to finish at 4,812. That index is now positive for the year. The S&P 500 (INDEX:SPX) was up 2.51%, or 48.18 to finish at 1,969. The Dow was up 2.43%, or 390.50, to finish at 16,493.

Asian markets extended the rally today with Japan’s Nikkie leading the way. Nikkie jumped 7.7%, its sharpest advance since 2008, to close at 18770.51. China’s Shanghai Composite Index also continued its advance with a 2.7% rise.

We are not where we were. The Dow remains 1,000 points below its highs, achieved last month, while the S&P remains 108 below its one-month high and the NASDAQ remains 300 points below its highs. The Volatility Index or VIX fell 10% to finish at 24.77, still elevated, but the lowest reading since August 20.

Apple in Focus

Shares of Apple (NASDAQ:AAPL)  increasingly match the moves and moods of the market, and yesterday was no exception. The shares were up 2.78% on the day, or $3.04, to finish at $112.31, then fell slightly in after-hours trading.

Tomorrow’s big event will be a news conference where Apple announces its new fall line, including new iPhones with better cameras, a new iPad and a new Apple TV. These events in the past moved the market, at least in Apple stock, but now they no longer do. People expect Apple to do big things, and they’re no longer surprised by it.

Germany Powers the Market

Germany led the way yesterday, with the DAX up 1.61%, but it was the data coming out of Germany, and the prospect for more, that really got people excited. The German trade surplus hit a record high in July of $25.6 billion, with exports up 2.4% and the current account balance also rising more than expected.