US Stock Market Recap: Infrastructure Boom Just Beginning

Good news overseas helped spur on a rally that began on Friday after the worst jobs numbers in over a decade. The Dow (^DJI) today closed higher by 298 points or 3.5% at 8934, this is only 7 points below the 50-day moving average. The index has not been above the indicator since early September and not for an extended period of time since May. The S&P 500 (^GSPC) closed at 909, up 34 points or 3.8%. The NASDAQ (^IXIC) had the best day, up 4.1% or 62 points to 1571.

Even though the major indices remain below their 50-day moving averages, there were a few major resistance levels taken out today. The S&P 500 broke above the high during the last rally attempt (900), breaking the short-term series of lower lows and lower highs. Keep in mind that today’s move is only one day, but it is a start. The next level of resistance and the confirmation of an intermediate-term bottom will be a close above the 50-day moving average (930). If this occurs it will clear the path for the S&P 500 to run to the next level of significant resistance at the 1000 area. If you are concerned about support on the downside, the short-term uptrend line connecting the higher lows is at 825.

INFRASTRUCTURE FINALLY GETTING RESPECT

The news from the President-Elects office this weekend in regards to stimulating the economy through the expansion and rebuilding of our nations infrastructure gave the market and the sector a major boost. Obama pledged to create the largest public works construction program in a half century.

So who will be the big winners? Companies involved in everything from building road and bridges to water and sewer to electrical grids to green infrastructure and even the expansion of broadband internet access. As far as the specific stock winners, there will be a number of stocks I have already mentioned over the years in regards to infrastructure.

Take AECOM Technology (ACM), the global infrastructure and engineering firm that has exposure to everything from transportation to green energy. Public transportation is lacking big time here in the US and ACM will benefit if Obama decides to throw billions at the flailing sector. The stock has clearly been attracting money in anticipation of the new president following through on one of his election promises regarding infrastructure. ACM is up 100% since closing at an all-time low on 10/27/08. I do expect a pullback in the coming days for this stock in particular, but I do like it over the long-term.

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