Greek Woes Hurt Stocks

Byinfo@50park.com

Monday, September 19, 2011
Stock Market Commentary:

Stocks snapped their longest winning streak since July after fresh fear regarding a Greek default resurfaced over the weekend. The major averages continued trading between support and resistance of their current base but most European markets are still near their 2011 lows. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

Greek Fears Dominate The Headlines- Again

Over the weekend, fears reemerged that Greece would default which hammered global equity markets on Monday. On Monday, European Union and International Monetary Fund inspectors were scheduled to hold a teleconference with Greece’s Finance Minister Evangelos Venizelos to determine whether or not the government is eligible for an aid payment due next month. The second bailout package will be held by EU leaders on July 21. This snapped a 5-day rally for most stock markets around the world which was the longest consecutive rally since July.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 
 

Similar Posts

  • Stocks Higher On A Slew of Earnings Data

    Byinfo@50park.com

    Since the current rally began on July 1, the major averages have rallied on suspiciously light volume, leadership has been very light and resistance has held firm- all unhealthy signs. This ominous action suggests another pullback may be in the cards. That said, patience and caution are of the utmost importance until the major averages close above resistance. Trade accordingly.

  • Robust Rally Continues!

    Byinfo@50park.com

    Monday-Wednesday’s Action: Stocks Successfully Test Support!
    Over the weekend, EU leaders kicked the can down the road and reschedule yet another meeting on Wednesday to tackle their onerous debt levels. Elsewhere, shares of Catepillar Inc. (CAT) gapped up after topping Q3 estimates and raised their 2012 forecasts. The news on the M&A front was healthy- shares of RightNow Technologies (RNOW) and Healthspring Inc. (HS) gapped up after agreeing to be acquired on Monday.
    Stocks fell on Tuesday and turned negative for the week as investors digested the latest round of lackluster earnings and EU leaders kicked the can down the road. Since 2008, we have been telling clients that is impossible to solve a debt crisis with more debt! However, the cognoscenti feel otherwise and as always we shall let the markets guide us.The news from the economic front was less than stellar. Consumer confidence in the U.S. unexpectedly fell in October to the lowest level since March 2009, during the “Great Recession.” Separately, the S&P Case/Shiller index of home prices in 20 major U.S. cities fell and missed estimates in August which reiterates how weak the housing market is right now.
    Stocks bounced off support (SPX 1230) on Wednesday after Germany passed a plan to expand the EU bailout measure. In the U.S., durable goods topped estimates which bodes well for the economic recovery. Durable goods rose +1.7% in September which was the largest increase in six months and topped the +0.4% estimate. In other news, mortgage applications rose last week and recovered some of the losses from the previous week as demand for purchases and refinancing rose.
    Thursday & Friday’s Action: Risk Assets Surge on EU Deal!
    Stocks soared on Thursday after private lenders agreed to a 50% haircut on their Greek debt and EU leaders agreed to leverage the hell out of their EU bailout plan. French President Nicolas Sarkozy said the EFSF (European bailout fund) will be leveraged 4-to-5 times in an attempt to curb their excessive debt woes. Sarkozy also spoke with Chinese leader Hu Jintao who offered to help Europe from imploding. Economic data in the U.S. was positive, the Labor Department said weekly jobless claims came in at 402,000 which barely beat expectations. More importantly, GDP jumped +2.5% last quarter which matched estimates and bodes well for the economic recovery. Stocks were relatively quiet on Friday after consumer spending rose but incomes remained lackluster.
    Market Outlook- Confirmed Rally:
    The major U.S. averages are back in a new confirmed rally and broke above the mid-point/resistance of their 6-week bullish double bottom base. The benchmark S&P 500 index scored a proper FTD on Tuesday, October 18, 2011, i.e. Day 12, when it rallied over 2% on heavier volume than the prior session. In addition, it is important to note that the bulls scored a victory since many of the major averages closed above their downward sloping 50 DMA lines for the first time since late July! Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. If you are looking for specific help navigating this market, please contact us for more information.
    Stop Chasing Stocks,
    Let Them Chase You!
    Join FindLeadingStocks.com Today!

  • Another Strong Week On Wall Street

    Byinfo@50park.com

    Market Action- Confirmed Rally; Week 25 Ends
    It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November as this market proves resilient and simply refuses to go down. From our point of view, the market remains in a confirmed rally until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.
    Are You Looking For Someone To Manage Your Money?
    Our Private Wealth Management Services Can Help You!

  • New! Strong Week & Month On Wall Street!

    Byinfo@50park.com

    Market Outlook- Market In A Confirmed Rally
    From our point of view, the market is back in “rally-mode” as all the major averages continue to trade above their respective 50 DMA lines and are flirting with, or at, fresh 2011 highs! In addition, leading stocks have held up very well even as the major averages slid below their respective 50 DMA lines in mid-April which is another encouraging sign. If you are looking for specific help navigating this market, please contact us for more information.
    Want Better Results?
    You Need Better Ideas!
    We Know Markets!
    Learn How We Can Help You!