Respecting Caffeine, Steel, Zeus und Da Vinci Surgeons

Driven by a better than expected reading on manufacturing activity from the Chicago PMI in the U.S., as well as continued relief that the debt crisis in Greece has been at least temporarily defused, U.S. and world stocks shot higher again on Thursday.

It was the fourth straight day of gains for equity markets after almost two months of weakness The crisp rally has taken the S&P 500 above its technically important 50-day moving average, often a highly bullish development in terms of market momentum.

With Thursday’s gains, the S&P 500 SPDR ETF finished the first half of 2011 with a total return of 5.92%. This basket of the biggest public companies in the U.S. had spilled into negative territory earlier this month after it had retreated 7% from its late April peak.

As Paris, Berlin and die ganze euro land dealt with the possibility of a Greek debt default, vers la mer Atlantique, hatte man Angst vor der wirtschaft Amerikaner. Weekly arbeitslos reports aux Etats-Unis were ticking perceptibly above their 4-week average. People freaked and sold quality stocks at prices in many cases 25% to 50% cheaper than today's prices after a monster 4-day comeback in stocks and anything that was risky. Options players speculating on rebounds in just about anything cleaned up madly. Torture yourself and look at something like the FSLR Jul 140 call for the past two weeks. To strike out looking is considered poor-form. Game changing lettuce for those with cojones and risk capital, dog!

[forbesvid id="fvn/market-blaster/zeus_kronos_coffee_and_copper_for-a-greek_rally" showid="80"]

The strength in stocks and the bullish economic readings sucked some of the steam out of bonds, with the yield on the 10-year U.S. Treasury note sailing higher up near 3.16%, up from 2.85% less than one week ago.

One unifying theme in markets has been universal betterment of the economic picture. Economically sensitive stocks have responded as expected and snapped back mightily from weakness of just a week ago. Companies are able to raise prices to maintain profit margins without sacrificing sales, or so investors seem to think. The trend of flexing pricing power for corporate players can be seen in commodities, special chemicals and even coffee.

To stick with the Greek theme, consider Zeus and Kronos. Not so much the strained mythological father-son relationship between Greek gods known well to Edith Wharton readers. Cool story of cold revenge, but for making money, think of a steel maker and a specialty chemical company.

Dallas-based Kronos announced Thursday that it would be raising the price of titanium dioxide, an essential ingredient in many paints, but 25% and higher. The stock rallied in response as investors are betting that the higher pricing sticks.

Olympic Steel, with the popular “ZEUS” ticker, has been rallying with the rest of the steel sector. The stock trades for just 10.6 times expected 2011 earnings, though sales shot higher by 75% in the most recent quarter. Look for ZEUS to keep blasting higher if the strength of steel prices persists.

In coffee, Starbuck’s announced last month a price hike that takes effect in early July. The big standout in coffee, however, has been Green Mountain Coffee Roasters, which continues to hit new highs, tagging $90 on Thursday. Green Mountain is the seller of the Keurig single-serve brewing systems that are gaining popularity in homes as well as in places that sell coffee, like Dunkin Donuts and Starbucks.

Speaking of coffee (or at least the cups that hold it), take a look at this monster stock that’s on the move again. Sunnyvale, Calif., based Intuitive Surgical is making a run at a new high, closing just a few bucks shy of its past April peak at $376. The bullish pattern that appears to be setting up in the shares of the maker of the DaVinci robotic surgery systems is a cup-with-handle, well loved by devotees of IBD and the CANSLIM methods of William O'Neil.

[wikinvestchart exchange="NASDAQ" ticker="ISRG" range="recent" rolling="6 months" height="365" width="570" live_quote="true" annotations="false"]

Imagine a coffee cup traced out by the bowl-shaped price chart from the $376 high to the present price of $372. That’s the cup. The handle is not there, yet but it will appear if ISRG rallies to $376 and then you see some profit taking on low volume, and then a breakout move. That’s the time to jump in. Then again, sure would have been nice to buy this baby a couple of weeks ago below $340, right?. Those who know the stock love it for its history of always coming back from being down.