Tuesday, December 29, 2009

Market Commentary:

The major averages traded between positive and negative territory before ending lower as investors digested the latest round of mixed economic data. Volume, an important indicator of institutional sponsorship, was lower than Monday’s session which indicated large institutions were not aggressively dumping stocks. Advancers were about even with decliners on the NYSE and Nasdaq exchange. There were 27 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 total of 68 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Housing Data: The S&P/Case-Shiller® Home Price Index

At 9:00 AM EST, the S&P/Case-Shiller® home price index was released. The index is used as a proxy for the housing market and tracks monthly changes in the value of residential real estate in 20 metropolitan areas across the country. October’s reading came in at 146.58 vs.September’s 146.51, for a -7.3% year-on-year rate vs. a -9.4% decline in September. Housing stocks, sold off on the news which illustrates that the ailing housing market is still not out of the proverbial woods.

Consumer Confidence: The Conference Board’s consumer confidence index

At 10:00 AM EST, the Conference Board released an upbeat report on consumer sentiment. The Conference Board’s consumer confidence index increased by 2.3 points to 52.9. The survey covers five thousand consumers across the country each month and is used as a proxy for consumer spending. Typically, stronger consumer confidence translates into stronger consumer spending but they are not directly correlated each month.

Market Action: Objective Analysis of Price & Volume

Looking at the market, the action remains constructive. The Dow Jones Industrial Average, small cap Russell 2000 index, S&P 500 and Nasdaq and NYSE composite are all trading near fresh 2009 highs. The inverse relationship with the US dollar has eased in recent weeks as both stocks and the greenback have rallied in tandem. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing.

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