Monday, January 30, 2012
Stock Market Commentary:

On Monday, stocks and a slew of other risk assets fell as the month of January draws to an end. So far, this has been a strong month for risk assets and a little profit taking should be expected after such a strong move. The idea going forward is to assess the “health” of the pullback and see if it is nothing more than a short lived pullback or the beginning of something more severe. The news on the economic front did little to help stocks. Personal income rose by +0.5% last month in the U.S. which topped the Street’s forecast for an increase of +0.4%. Meanwhile, spending was flat during the final month of the year which just missed the average estimate for an increase of +0.1%.

Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December. Now that the major U.S. averages scored a proper follow-through day the path of least resistance is higher. Looking forward, one can err on the long side as long as the benchmark S&P 500 remains above support (1292). Leadership is beginning to improve which is another healthy sign. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!