The Dow Jones Industrial Average finally gained enough ground to close at a new high yesterday. But a broad market advance that started at the opening ran into a brick wall following the Fed’s decision to keep interest rates at current levels. As the FOMC statement was digested, stocks sagged accordingly, and by the close, much of the early gains had vanished. 

The bond market also contributed to the late selling of stocks as a spike in bond yields took the 10-year Treasury note to the highest yield since March 2009. And strong renewed selling of municipal bonds also had a huge impact on stock prices as muni yields spiked, as well.

In economic news, Duke University and CFO Magazine released a survey showing that, in December, chief financial officers had become more optimistic. And, according to the Census Bureau, November retail sales were better than forecasted, and the sentiment of small business owners improved to its highest level in three years. Producer prices rose to better-than-expected levels, and business inventories were higher, but failed to meet estimates.

In corporate news, Best Buy Co., Inc. (NYSE: BBY)? missed analysts’ earnings by a wide margin, and the stock fell 15%. Other electronic retailers saw their stocks fall with BBY: RadioShack Corporation (NYSE: RSH) fell over 3% and GameStop Corp. (NYSE: GME) was off .82%. Amgen, Inc. (NASDAQ: AMGN) rose 4.9% on positive results from its prostate cancer drug. And C.R. Bard, Inc. (NYSE: BCR) gained 4.1% after announcing that it expects double-digit earnings growth next year. Bard also announced a restructuring that will result in some job cuts, as well as a boost in its stock buyback plan.

The 10-year Treasury note’s yield rose to 3.457%, which is more than a full percentage point rise in two months. The U.S. dollar was strong throughout the day, but rose even more following the Fed’s statement that it would complete its previously announced stimulus plan. The euro fell to $1.3382, down from $1.3392 on Monday.

At the close, the Dow gained 48 points to 11,477, the S&P 500 rose a point to 1,242, and the Nasdaq gained 3 points, closing at 2,628. The NYSE traded 957 million shares with decliners ahead of advancers by 1.3-to-1. And the Nasdaq traded 486 million shares with slightly more advancers than decliners.

Crude oil for delivery in January fell 33 cents to $88.28 a barrel, and the Energy Select Sector SPDR (NYSE: XLE) closed at $66.15, off 31 cents. February gold rose $6.30 to $1,404.30 an ounce in response to the Fed’s announcement that it would continue with its current monetary policy. The PHLX Gold/Silver Sector Index (NASDAQ: XAU) fell 0.69 points to 225.09.

What the Markets Are Saying

The Dow Industrials finally broke to a 52-week high joining the other major indices in a solid signal that the long-term trend is up. 

Yesterday, we summarized the support for each of the major indices, so today let’s consider the next resistance zones, i.e., the targets of the current advance. For each of the indices, we must go back to 2008 for our targets, since it is there that a major support zone was violated as the bear market entered its final plunge.

The Dow broke support in June 2008 at 11,785, and a mid-August rally failed at that spot leading to acceleration in downside volume as the market rolled over. The Dow number equates to 1,278 for the S&P 500 and 8,365 for the NYSE Composite. 

However, the recent exuberant break and run of the Nasdaq has taken the “junior index” to well beyond any June 2008 resistance. Looking back to December 2007, the Nasdaq chart shows the right shoulder top of a head-and-shoulders reversal, which roughly matches a left shoulder in July, and that is our target for the Nasdaq: 2,700 to 2,710.

With the break of the Dow’s stubborn top, we focused today on the next long-term resistance lines. Tomorrow, we will zoom in on the numbers that are of most interest to traders — the near-term support and resistance lines for each index.

For a top health-care stock to buy, see the Trade of the Day.

Today’s Trading Landscape

To see a list of the companies reporting earnings today, click here.

For a list of this week’s economic reports due out, click here.

If you have questions or comments for Sam Collins, please e-mail him at samailc@cox.net.