Analysts View: Stocks break out to 4-month high

NEW YORK (Reuters) - The S&P 500 closed at a four-month high on Monday as a long-awaited break above a technical range and a flurry of positive corporate news increased investor optimism.

COMMENTS:

DAN WANTROBSKI, DIRECTOR OF TECHNICAL RESEARCH, JANNEY MONTGOMERY SCOTT, PHILADELPHIA

"People were focusing on the key 1,130 level, and breaking above that was a bullish indication. The next significant level is 1,200, and I think we have a good probability of retesting that soon.

"The other thing we're watching is breadth readings, which have diminished from past rallies. We're getting new highs on lower breadth readings. We want to make sure there's full participation, otherwise it suggests we could get some profit taking. For S&P companies, the 50-day moving average is a good indicator to stay above in these choppy markets."

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP., CHICAGO:

"With the absence of any bad news the market went through the upper end of the range today and now people might half to recalibrate what kind of shape the market's in.

"What you've heard a lot of is that we're stuck in a trading range and now that we're peeking our heads out of the top end of the trading range I think that that strategy that we're just trading back and fourth... has to be reexamined. So it will be interesting to see if this doesn't create a little bit more confidence in the market.

"The fundamental issue is that corporate earnings have been good, interest rates are low; the stock market has been unloved all year and now perhaps you're going to get a little bit more attention paid to equities."

LIGHT VOLUME:

"Once again I still think what you're seeing is traders not investors, so you're not seeing necessarily the man on the street saying 'Oh, I want to buy stocks' but I think you're seeing traders saying that the market is going through the upper end of the range and that creates some buying. It is primarily the same dollars washing around rather than new money coming into the market - so far.

"If the market pulls back and the trading dollars go the other way you're back down again. But the hope would be that you could actually get money off of the sideline from real investors who want to enter the market.

"It would be very encouraging that after this breakout on the upside if you could actually see volume picking up and having new investors coming into the market. That would be a great sign."

JUSTIN WALTERS, CO-FOUNDER OF BESPOKE INVESTMENT GROUP, HARRISON, NEW YORK:

"You usually want to see a couple of days to see if it is the right time to step in on the long side. We all have been waiting for a breakout either upside or downside as a directional indicator. Today was the first day in a long time that the S&P 500 sustained a move above 1,130. We don't need to go even higher from here to see gains. We just need to see it hold around here."

JOHN KOSAR, DIRECTOR OF RESEARCH, ASBURY RESEARCH, CHICAGO:

"It is a breakout. It's important this rally was technology led. When people want to invest in stocks and are looking for price appreciation, they want to ride the fastest horses, and that's generally tech. So you usually want to see tech lead; it indicates people want to get back into the market in an aggressive fashion.

"That being said, there are some indications we're not going to run away here until we have a good pullback first. For now the action is very positive, and until that changes, why fight it.

"After 1,140 we're looking at 1,174, which are the May highs, and from there, that would clear the deck for a retest of the April highs."

http://www.reuters.com/article/idUSTRE68J4KP20100920