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Can S&P Retake 2011 High Before Pull Back?

Stocks had their third best day of the year Thursday, and now traders are watching to see if the S&P 500 can retake its 2011 high.

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The debate also continues about whether the stock market is ready for a pull back, after the S&P’s nearly 8 percent gain since Jan. 1. Both the Dow and Nasdaq broke 2011 highs last week and are trading at multi-year highs. In the case of the Nasdaq, a tech rally has helped push it to levels last seen in December, 2000.

The S&P 500 is a stone’s throw from 1,370, the high it made on May 2, 2011. On Thursday, it rose 14 to 1,358, breaking through a resistance level in the low 1,350s level that it had been battling for the last week. The Dow, up 123 Thursday to 12,904, is now closing in on the psychologically important 13,000 level.

The euro moved higher Thursday, as investors became more comfortable with the prospects that Greece will get bailout funds. The euro erased early losses and was up a half percent at 1.3133. European finance ministers meet Sunday and are expected to vote Monday on Greece’s 130 billion euro bailout.

“The big move for the Dow was when it hit its (2011) high last week. Many bears on the street had to throw in the towel. 13,000 — that’s like the silver medal. It won the gold last week,” said Jordan Kotick, Barclays Capital global head of technical strategy.

The past week has been more volatile than others in 2012. Thursday’s gains followed Wednesday losses, which was the market’s worst performance of the year.

Kotick said he expects stocks to hold in a bit longer before pulling back, and that markets around the world are in a kind of “global Kumbaya,” as indexes break last year’s levels. “If it was just about the S&P 500, people would not focus on it,” he said.

Kotick said the market could pull back at some point after the S&P climbs above its 2011 high and “it will probably overshoot it.”

“We’re going to look for some corrective phase in March, April, leading to a buying opportunity,” he said.

What to Watch

CPI is reported at 8:30 a.m. EST and is expected to show a 0.3 percent rise in consumer prices. The leading indicators for January are released at 10 a.m. There are several earnings reports, including Heinz, Brookfield Asset Management, Campbell Soup, EnCana, Amerigroup and Gold Fields.

Symbol
Price
 
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VANGRD ST TE
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CPB
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ECA
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15255
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HNZ
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Congress could vote as early as Friday on extending the payroll tax cuts which would expire at the end of the year.

Treasury Secretary Tim Geithner is expected to testify on the budget before the House Budget Committee at 2 p.m. EST.

Italian Prime Minister Mario Monti meets German Chancellor Angela Merkel in Rome, while French President Nicolas Sarkozy meets with U.K. Prime Minister David Cameron.

Follow Patti Domm on Twitter: @pattidomm

Questions? Comments? Email us at marketinsider@cnbc.com

Disclaimer

  • Patti Domm

    Patti Domm is CNBC Executive Editor, News, responsible for news coverage of the markets and economy.

  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

  • CNBC Senior Commodities Correspondent and Personal Finance Correspondent

  • JeeYeon Park is a writer for CNBC.com. Follow her on Twitter: @JeeYeonParkCNBC

  • Rick Santelli joined CNBC Business News as an on-air editor in 1999, reporting live from the floor of the Chicago Board of Trade.

  • Senior Producer at CNBC's Breaking News Desk.