Stocks Jump After Greek Bailout

Monday, May 3, 2010
Market Commentary:

The major averages soared on the first trading day of the month after news broke that Greece will bailout. Volume totals on Monday were reported lower on the NYSE and on the Nasdaq exchange compared to Friday’s levels. Advancers led decliners by about a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs easily trumped new 52-week lows. There were only 18 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 38 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally.

Greece Bailout, Healthy Earnings & Economic Data Lifts Stocks:

Over the weekend, news broke that the EU will spend $146 billion to bailout Greece. The news sent the EU plunging as fear spread that other EU nations might also need assistance. In the US, billionaire investor, Warren Buffett defended Goldman Sachs Group Inc. (GS) at his annual shareholders meeting in Omaha. Last year, Buffett invested $5 billion in the investment bank and said the bank should not be blamed for losses on lousy mortgage bets. Elsewhere, US manufacturing grew at the fastest pace since 2004 and personal income and spending also rose which helped lift stocks. Approximately +78% of the S&P 500 companies that have reported their Q1 results have topped estimates which bodes well for the economic recovery.

Market Action- Confirmed Rally:

It is important to note that the major averages have been steadily rallying since early February and a pullback of some sort should be expected.  The increasing number of distribution days is putting pressure on this 10-week rally. However, the fact that the market continues to shrug off most of the negative data bodes well for the bulls.
Professional Money Management Services- Free Portfolio Review:
Our skilled team of portfolio managers knows how to follow the rules of this fact-based investment system. If your portfolio is greater than $250,000 and you would like a free portfolio review, 
Click Here to get connected with one of our portfolio managers. ** Serious inquires only, please.

Similar Posts

  • Stocks Consolidate Recent Move Near 50 DMA Line

    Thursday marked Day 4 of the current rally attempt which means that as long as Monday’s lows are not breached the window is now open for a proper follow-through-day (FTD) to emerge. In order for a proper FTD to emerge one would have to see at least one of the major averages rally at least +1.7% on higher volume than the prior session as a new batch of high ranked leaders trigger fresh technical buy signals. Once that occurs, then the current rally attempt will be confirmed and the ideal window for accumulating high-ranked stocks will be open again. However, if Monday’s lows are breached, then the day count will be reset. Trade accordingly.

  • Stocks Down; Dollar Up

    Wednesday, March 24, 2010 Market Commentary: The major averages, US Treasuries, the euro and a slew of commodities pulled back as the dollar advanced after Portugal’s debt was downgraded by Fitch.The volume total on the NYSE was about even compared to Monday’s totals, while volume was reported slightly higher on the Nasdaq exchange. Decliners led advancers by more than…

  • Day 3 Of A New Rally Attempt

    Looking at the market, Wednesday marked Day 3 of a new rally attempt which means that as long as Monday’s lows are not breached, the earliest a possible follow-through day could emerge will be Thursday. However, if Monday’s lows are taken out, then the day count will be reset and the chances for a steeper correction increase markedly. It is also important to see how the major averages react to their respective 50-day moving average (DMA) lines. Until they all close above that important level the technical damage remaining on the charts is a concern. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is key.

  • Day 9: Investors Digest A Slew of Economic & Earnings News

    Looking at the market, the major averages continue to trade near their respective 50 DMA lines as they consolidate their recent move. Remember that as long as February 5th lows are not breached the window remains open for a new follow-through day (FTD) to emerge. A new follow-through day will confirm the current rally attempt and will be produced when one of the major averages rallies at least +1.7% on higher volume than the prior session as a new batch of leaders breakout of sound bases. However, if the February 5, 2010 lows are breached then the day count will be reset and a steeper correction may unfold.

  • Week 2: Stocks & Commodities Fall

    The 12-week rally ended on Tuesday, November 16, 2010 after the major averages plunged in heavy volume back down towards their respective 50 DMA lines. In recent weeks, we have repeatedly written about how the major averages were experiencing wide-and-loose action after a big move and made it very clear that that was not a healthy sign. At this point, we are looking for a new rally to be confirmed with a new follow-through day before taking any new positions. Caution and patience are key at this point. Trade accordingly.

  • Stocks Negatively Reverse After Beige Book Shows "Modest" Economic Growth

    It is well known that a market should not be considered “healthy” unless it trades above its rising 200-day moving average (DMA) line. The fact that all the major averages are below both their 50 & 200 DMA lines bodes poorly for the near term. That said, the bears will likely remain in control until the popular averages close above their important moving averages and the euro catches a bid.

Leave a Reply

Your email address will not be published. Required fields are marked *