Stocks Edge Higher; Dow Breaks 13,000!

Byinfo@50park.com
Dow Breaks 13K For 1st Time Since 2008
Dow Breaks 13K For 1st Time Since 2008

Tuesday, February 21, 2012
Stock Market Commentary:

Stocks and a slew of other risk assets rallied on Monday and Tuesday after Greece finally agreed to the onerous terms of their latest bailout package. The primary catalyst for the risk on trade was continued strength from the U.S. (and by extension global) economy in recent weeks. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. It was also encouraging to see the S&P 500 break above its downward trendline and its longer term 200 DMA line. Looking forward, the S&P 500 has done a great job staying above its Q4 2011 high (~1292) and is now doing its best to stay above 1356 which corresponds with July’s high. The next level of resistance is 2011’s high just above 1370. The bulls remain in control as long as the benchmark S&P 500 trades above 1292 and then its 200 DMA line.

Monday & Tuesday’s Action: Stocks Edge Higher; Dow Breaks 13,000!

The stock market in U.S. was closed on Monday in observance of the President’s Day holiday. However, U.S. futures, and oversea’s markets enjoyed nice gains on Monday on renewed optimism vis-a-vis the latest bailout for Greece. On Tuesday, the Dow Jones Industrial Average topped 13,000 for the first time since May 2008. The DJIA has been up every month since October and is currently enjoying one of its strongest rallies since the March 2009 low! Meanwhile, the tech-heavy Nasdaq composite has already taken out its 2007 high and is currently sitting at its highest level since December 2000! Make no mistake about it, the bulls are clearly in control of this market as the global economy continues to recovery from the Great Recession in 2008 and 2009. In the short term, stocks are very extended to the upside and a 5-9% pullback would be considered “normal” and “healthy” for this very strong bull market.

Market Outlook- Confirmed Rally

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. 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!
 

Similar Posts

  • Stocks Enjoy Best Week of 2010!

    Byinfo@50park.com

    Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. Looking forward, the 200 DMA line should now act as near term support as this market continues advancing, while any reversal would be a worrisome sign. It is important to note that the NYSE composite, benchmark S&P 500 index, and the Dow Jones Industrial Average have now all seen their 50 DMA lines undercut their respective 200 DMA lines which is is known as a “death cross” and has bearish ramifications. In addition, remember to remain very selective because all of the major averages are still trading below their downward sloping 50 and 200 DMA lines and a fresh downward trendline (shown above). 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.

  • Upward Trendline Under Attack!

    Byinfo@50park.com

    Market Outlook- Market In A Correction
    From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and downward trendlines. Since the beginning of May, we have urged caution as the major averages and a host of commodities began selling off. The next level of resistance is their respective 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Want To Follow Trends?
    Learn How We Can Help You!

  • 7-Week Rally Continues!

    Byinfo@50park.com

    So far, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade according

  • Stocks & Euro Tank On Strong Economic Data

    Byinfo@50park.com

    The Nasdaq composite sliced below Thursday’s lows which reset the day count for that index. Meanwhile, the Dow Jones Industrial Average just ended Day 3 of a new rally attempt which opens the window for a proper follow-through day to emerge. Elsewhere, as long last Tuesday’s lows (1040) are not breached in the S&P 500, the window remains open for a proper FTD to occur. However, if at anytime last Tuesday’s lows are breached in the S&P 500, then the day count will be reset. What does all of this mean for investors? Simple, the market remains in a correction which reiterates the importance of adopting a strong defense stance until a new rally is confirmed. Trade accordingly.

  • Stocks Edge Higher As EU Debt Woes Continue

    Byinfo@50park.com

    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.