Markets Soar on EU Deal!

Byinfo@50park.com

Thursday, October 27, 2011
Stock Market Commentary:

Stocks vaulted on Thursday after successfully testing support (1230) earlier in the week. The big catalyst came from Europe after private investors agreed to slash Greek’s debt by 50%. All the major averages are now positive for the year which is a very healthy for this rally. It is also important to note that the Dow Jones Industrial Average is on track for its single largest monthly gain in history! Stocks confirmed their latest rally attempt on Tuesday (10.18.11) day 12 of their rally attempt when the S&P 500 and NYSE composite scored proper follow-through days (FTD).  It is important to note that every major rally in history began with a FTD but not every FTD leads to a new rally. That said, one can err on the bullish side as long as the major averages remain above their 50 DMA lines.

Greece Takes 50% Haircut, 200 DMA line is Breached, & All Major U.S. Averages are up on the year!

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.

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.

Visit:
FindLeadingStocks.com

 

Similar Posts

  • Week-In-Review: Stocks Hit Fresh Record Highs

    Byinfo@50park.com

    Stocks Hit Fresh Record Highs Stocks rallied sharply last week after the damage from hurricane Irma was much less than originally expected. Thankfully, in the 11th hour, Irma weakened considerably, made a last-minute turn, and skated up the west coast of Florida. The Dow, S&P 500, Nasdaq Composite, and Russell all ended the week higher…

  • Healthy Economic Data Helps Stocks

    Byinfo@50park.com

    Looking at the market, the latest rally attempt was confirmed when a “cautious follow-through day” was produced by the Nasdaq Composite on Monday, March 1. Weighing into the decision to label the day a follow-through-day (FTD) was the strong action in leading stocks along with a great expansion noted in the new highs list. That action suggests that there is a healthy crop of strong stocks capable of fueling a substantial rally higher for the major averages. We will be looking out for any near-term distribution days (high volume declines) which would hurt the chances for this nascent rally. Until then, the bulls deserve the bullish benefit of the doubt as the major averages continue edging higher.
    It is a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

  • Week In Review: Strong Week On Wall Street

    Byinfo@50park.com

    Stocks Positively Reverse For The Week For the week, the bulls emerged victorious as the major indices positively reversed (opened lower and closed higher) which is a subtle and bullish sign. On the downside, the economy was the big loser after the latest round of “data” showed the economy remains weak. That means the “data-dependent” Fed will…

  • Stocks End Mixed As Dollar Edges Higher

    Byinfo@50park.com

    The major averages confirmed their latest rally attempt on Tuesday, June 15, 2010 when they produced a sound follow-through day. Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. Technically, it was encouraging to also see the Dow Jones Industrial Average and the benchmark S&P 500 Index rally above their respective 200-day moving average (DMA) lines. Looking forward, the 200 DMA line should now act as support as this market continues advancing, while any reversal would be a worrisome sign.
    Remember to remain very selective because all of the major averages are still trading below their downward sloping 50 DMA lines. It was somewhat disconcerting to see volume remain light (below average) behind the confirming gains. 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.