Stocks Consolidate Monday's Large Move

Byinfo@50park.com

Tuesday, September 14, 2010 
Stock Market Commentary

Stocks ended mixed after August’s retail sales topped estimates and gold surged to a fresh all-time high. Tuesday’s volume totals were reported about even on the NYSE and higher on the Nasdaq exchange compared to Monday’s levels. Decliners led advancers by a small margin on the NYSE and on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 69 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 77 issues that appeared on the prior session.

Slower Growth in Europe Hurts Stocks:

Stocks in Europe were under pressure before Tuesday’s open after a report showed economic growth in the Eurozone was slowing. In the US, retail sales toppped estimates and rose by the largest pace in five months. The Commerce Department said total retail sales swelled by +0.4% following a revised +0.3% rise in July. This was the second consecutive monthly gain and bodes well for the economic recovery.  

Market Action- Confirmed Rally:

Tuesday’s action was considered normal after Monday’s large move. Overall, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) remains healthy. Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. It was encouraging to see a flurry of high-ranked leaders trigger fresh technical buy signals and break out of sound bases in recent sessions. All the major averages jumped above their respective 200-day moving average (DMA) lines today which is another encouraging sign. The next important level to watch for the major averages are their summer highs.  It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.

Tired Of The Same Results? Do Something New That Can Help YOU! 
Contact Us For A FREE Portfolio Review- Click here…

Similar Posts

  • Home Prices Fall But Consumer Confidence Tops Estimates

    Byinfo@50park.com

    Tuesday, December 27, 2011 Stock Market Commentary: Stocks opened the shortened holiday week higher after the latest round of U.S. consumer sentiment topped estimates. From our point of view, Monday marked Day 5 of the current rally attempt which means the window is now open for a new follow-through day to emerge [as long as…

  • Day Count Reset; Market In A Correction 2.4.10

    Byinfo@50park.com

    Looking at the market, Thursday’s ominous action took out Monday’s lows and effectively ended the brief rally attempt which suggests a steeper correction may unfold and resets the day count for a proper follow-through day to emerge. It is also important to see how the major averages react to their respective 50-day moving average (DMA) lines which were support and are now resistance. 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 paramount.

  • Earnings & M&A News Lifts Stocks

    Byinfo@50park.com

    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. Tuesday marked the latest distribution day since the rally was confirmed on the March 1, 2010 follow-through day (FTD). According to the paper, there are 6 distribution days for the NYSE, 5 for the S&P 500, 4 for the Dow, and 3 for the Nasdaq in recent weeks. This puts some pressure on this 9-week rally, but has yet to cause any technical damage. The fact that the market continues to shrug off any and all negative data bodes very well for this 13-month bull market.

  • Stocks Fall On Negative Economic Data

    Byinfo@50park.com

    The market remains resilient as it simply refuses to go down. Longstanding readers of this column know that we prefer to focus more on how the market reacts to the news than the news itself. That said, the bears had all the possible ammunition to send stocks plunging on Tuesday and the fact that they did not (or could not), speaks volumes. In addition, the market remains strong since it has barely “corrected” and continues consolidating its recent move just below resistance. The bulls deserve the bullish benefit of the doubt until one of the major averages trades, and closes, below its respective 50 day moving average line.

  • Tough Week On Wall Street

    Byinfo@50park.com

    Some might say that Thursday was Day 1 of a new rally attempt due to the fact that the major averages closed in the upper half of their intra-day ranges, recovering from steep losses in the first half of the session. That still does not change the fact that the market is in a correction which emphasizes the importance of raising cash and adopting a strong defensive stance until a new follow-through day emerges. For the past several weeks, this column has steadily noted the importance of remaining very selective and disciplined because all of the major averages are still trading below their downward sloping 50-day moving average (DMA) lines. Their 50 DMA line may continue to act as stubborn resistance. It was also recently noted that a series of capital markets (Crude oil, Copper, NYSE Composite Index, among others) 50 DMA line already sliced below the 200 DMA line, an event known by market technicians as a “death cross” which usually has bearish implications. On Friday, the benchmark S&P 500 Index’s 50 DMA line offically undercut its longer term 200 DMA line which means the benchmark index can be added to the list. Trade accordingly.

  • Week in Review: Stocks Finally Pull Back & Large Double Top Forming

    Byinfo@50park.com

    Market Finally Takes A Breather: We wrote last week that, “In the short term, the market looks a little tired up here and has earned the right to pause for a while to catch its breath.” That is exactly what has happened as the major averages fell last week after a slew of “important” data was…

Leave a Reply

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