Thursday 12.10.09

Market Commentary:

Stocks rallied on Thursday after healthy trade data helped offset concerns about an increase in weekly unemployment claims. Volume, an important indicator of institutional sponsorship, was mixed when compared to Wednesday’s levels; lower on the NYSE and higher on the Nasdaq exchange. There were 24 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, greater than the total of 13 issues that appeared on the prior session. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Economic Data:

Before Thursday’s opening bell, the Labor Department said jobless claims topped expectations and rose last week to 474,000 after falling for five straight weeks. However, the bulls found comfort in the fact that the four-week average, which smooths out the data and is less volatile, slid to its lowest level since September 2008. Elsewhere, the Commerce Department said the trade deficit narrorwed to $32.9 billion in October. The report showed that exports surged thanks in part to a weaker dollar. In addition, exports rose for a sixth consecutive month which bodes well for the U.S. economy.

Timothy Geithner on Capital Hill:

Treasury Secretary Timothy Geithner testified before the Congressional Oversight Panel on Thursday. Geithner wants the government to extend the $700 billion TARP plan as the financial system recovers from last year’s crisis. He said that extending the TARP plan will help U.S. banks remain properly capitalized. Remaining properly capitalized will help financial institutions address potential threats that may arise in the future. Doing this will reduce the need for future government intervention if another financial shock occurs.

Afternoon Weakness:

Around 2:30pm EST, the bears showed up and put pressure on the major averages. The small cap Russell 2000 index turned lower and slid into negative territory after being up for most of the day. The small cap index closed just above its 50 day moving average as it continues working on the right side of its current base. It is also important to note that since the March low, small caps have outperformed their larger cap brethren. However, since the end of Q3, that relationship reversed and large caps are currently outperforming their peers. Leadership remains scarce as many stocks continue building bases.