Obama cabinet moves spark stock market surge

Small-cap stocks stormed out of negative territory late in the day, avoiding what looked like a sixth consecutive losing session when an oversold, thin market caught a bid in conjunction with news on the Obama leadership team. Despite the upbeat late rally, the Russell 2000 (NYSE:IWM) still tumbled to fresh bear market lows earlier in the day and closed out the week at the lowest point since April 2003. For today, small caps were up 21.22, or 5.51%, to 406.53, but are still down 47% for the year. Large-cap stocks fared better today, with the Dow up 6.54% and the S&P 500 up 6.32%. For 2008, the Dow is off 39% and the S&P 500 is down 45%.

And even though large caps outperformed small caps today, it’s not all wine and roses for big companies either. On Thursday, the S&P 500 tumbled to 11-year lows and a string of huge, name-brand companies continue to shrivel in front of our eyes. This week, the hammer came down on Citigroup Inc. (NYSE:C) as what used to be world’s largest bank (currently No. 2 U.S. bank) saw its stock collapse 19% today and some 70% in just the month of November. There were reports that Citigroup executives were considering selling off some business units, or perhaps the entire bank.

The market rallied into positive territory late in the day on news that Timothy Geithner, president of the New York Federal Reserve, was tabbed by President-elect Obama as the new Treasury Secretary. Obama is expected to announce his economic advisory staff early next week, which could soothe rattled investors. The New York Times also reported that Obama’s election rival Hillary Clinton would accept his nomination to the Secretary of State post.

From a charting perspective, it’s important to note that the market is oversold on momentum readings heading toward a holiday week, which could have played a supportive role in today’s action. In addition, there was some talk that options expiration activity today also could have been a supportive influence. Either way, the market will still need to confirm today’s upside push over a longer time frame, on solid volume and with bullish chart patterns to suggest that any kind of noteworthy bottom is in play. Looking ahead to next week’s action, the market will likely . . .

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