January Rally Holds; Banks, Small-Caps Up

11Jan12

Momentum stayed positive for the new year, with stocks posted another day of gains in 2012 as the start of earnings season sparked optimism for a market trading at its highest levels since early August.

Major indexes rallied around the 1 percent range, with the strongest gains coming from materials, financials, industrials and energy stocks. Defensive sectors were the least buoyant as risk-on looked to be the day’s theme.

The early-January rally — known as the “January effect” and often a bullish sign for markets — inspired hopes that US markets were beginning to shake off headline risk from the European debt crisis and moving toward a more independent track.

“We’ve been handcuffed by whatever happens in Europe,” said Ryan Detrick, senior analyst at Schaeffer’s Investment Research in Cincinnati. “Now we’re starting to see a little decoupling from that. When you consider some of the recent economic strength we’ve had, it’s a potentially good sign.”

Since 1950, the market has started the year with five consecutive gains. It ended the year positive 87 percent of the time, according to the Stock Trader’s Almanac.

Source:CNBC.com | January 10, 2012 | 10:41 AM EST