Friday, April 9 2010
Market Commentary:

Stocks closed higher for the week and overcame the latest round of mild distribution as leading stocks continued to act well and the Dow Jones Industrial Average briefly touched 11,000. On Fridya, volume totals on the NYSE and on the Nasdaq exchange were reported lower compared to Thursday’s totals, revealing a lack of buying conviction from the institutional crowd after recent distributional pressure. Breadth was positive as advancers led decliners by a 13-to-6 ratio on the NYSE and by a 5-to-4 ratio on the Nasdaq exchange. New 52-week highs trumped new lows on both exchanges yet again. There were 48 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher from the 36 issues that appeared on the prior session.  A healthy crop of new leaders making new highs bodes well for any market rally, so the recent expansion in leadership has been a welcome post-holiday improvement. 

Monday’s Action:

Stocks closed higher on Monday as investors returned from a long holiday weekend and the latest round of stronger-than-expected economic data was released. Monday was also the first trading day after March’s non-farm payrolls report was announced. Stocks rallied around the world after the Labor Department reported the strongest monthly reading in payrolls since Q1 2007. Elsewhere, the ISM released its service index which topped analysts’ estimates. Separately, pending home sales unexpectedly rose which bodes well for the ailing housing market. The healthy housing data helped a slew of housing stocks rally as investors believe “the worst” is over concerning the housing market’s downturn.

Tuesday’s Action:

On Tuesday, stocks ended mixed after the Australian Central Bank raised interest rates for a 5th time by a quarter point to +4.25% and Greece rejected an EU-IMF aid package. The euro tanked (greenback rallied) after Greece denied an EU-IMF backed plan to help it recovery from its worst financial crisis since WWII. Stateside, the Federal Reserve released the minutes of its latest meeting which showed a stronger, not weaker economic outlook.

Wednesday-Friday’s Action:

Stocks suffered a mild distribution day on Wednesday after consumer credit fell and concern about Greece defaulting accelerated. The Federal Reserve said consumer borrowing slid by a larger than expected reading of $11.5 billion in February. The fear that lower consumer spending may curtail economic growth played a pivotal role in sending stocks lower on Wednesday. The major averages edged higher on Thursday after US retailers reported stronger than expected same store sales last month. In addition, the Labor Department said initial jobless claims unexpectedly rose +18,000 to +460,000 last week. In Europe, the Greece fears subsided after European Central Bank President Jean-Claude Trichet said he does not expect Greece to default. On Friday, a slew of asset classes ranging from stocks to commodities rose on speculation that deeply indebted European nations will receive an international bailout. Only time will tell whether or not this plays out.

Market Action- Confirmed Rally:

The benchmark S&P 500 Index currently has 5 distribution days while the Nasdaq Composite and Dow Jones Industrial Average have 4 since the March 1, 2010 follow-though-day (FTD). These distribution days have not been damaging, which bodes well for the major averages. Trade accordingly.
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