Daily Market Commentary

1 Year Anniversary From The '09 Lows

Monday, March 8, 2010
Market Commentary:

The major averages traded between positive and negative territory as investors digested last week’s impressive move. Volume, a critical gauge of institutional demand, was reported lower than the prior session on the Nasdaq exchange and on the NYSE, offering a reassuring sign that institutional investors were not aggressively dumping stocks.  Advancers led decliners by over an 11-to-8 ratio on the NYSE and by nearly a 15-to-13 ratio on the Nasdaq exchange. There were 76 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, up from the 59 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges while new lows were in the single digits.

Obama’s Road Trip:

A slew of drug companies tumbled after President Barack Obama gave what appeared to be a final push to overhaul our troubled health-care system.  Pfizer (PFE), the world’s largest drug manufacturer, UnitedHealth (UNH), the largest US health insurer by revenue, and a host of other companies fell after Obama began a series of road trips to the Philadelphia area today and St. Louis on March 10 to rally public support.

1-Year Anniversary From Bear Market Lows:

This week marks the one-year anniversary of the end of the brutal bear market that sent the S&P 500 plunging to a 12-year low of 666.79. A new FTD was produced on March 12, 2009 which helped send the benchmark average soaring +68% in 12 months. A large portion of that rally was due to the enormous amount of cash fund managers raised during the horrific bear market. The latest study from the Investment Company Institute shows that equity mutual funds are burning through their cash reserves at the fastest rate since 1992. The report shows that cash reserves at equity mutual funds are at their lowest rate since 2007. Cash fell to 3.6% of assets, down from 5.7%  in January 2009. Their portfolio managers are left with $172 billion which is the fastest drop since 1991.

Market Action- Confirmed Rally:

Looking at the market, since last Monday’s follow-through day (FTD), the market and a batch of leading stocks, steadily rallied which is a healthy sign. The fact that we have not seen any serious distribution days show up since Monday’s FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.
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