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Oil Moves Driving Stocks? Yes and No

Stocks are strong today. Is it all just about oil or is there something else going on? That's the question of the day.

The answer is, lower oil is definitely helping — and hurting — key groups. The Dow Transports, up 2.3 percent, is far and away the strongest of the major indexes. Energy is the only one of the 10 S&P sectors that is down.

But there are other issues helping stocks.

1) Bank of America's analyst meeting is being well received. At 1:45pm ET, BAC has already traded 180 million shares, well north of the 155 million it normally trades on a full day.

The reason: the bank implied they would attain "normalized" earnings in 2013; these implied earnings were above the Street's estimates. It's more than that: "normalized" earnings are the Holy Grail for bank investors. It implies that...well, things are getting back to normal. There are plenty who think that "normalized" earnings will not materialize for a long time, and a few who think they are a pipe dream. If BAC can argue...convincingly...that we are closer than skeptics think, that is a positive.

CLSA analyst Mike Mayo said that the BAC "headline numbers are better than we assumed..."

I have also noted the increasing chatter around March 20, when the government will communicate which banks may be able to raise dividends (see my prior Trader Talk note).

2) The Federal Reserve executed a fairly large Permanent Open Market Operations (POMO) order this morning — about $7.6 billion worth was bought. These POMOs happen every day, but today was larger than most. It is difficult to quantify the exact impact that these POMO operations have on stocks, but traders believe they do have an impact

3) home builders are all trading up 3 to 5 percent, as Pulte prereleased encouraging comments on order trends for January and February. The exact value of these order trends are debatable (they made some changes in the methodology), but PHM is trading up 7 percent on heavy volume.

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