Stocks Take A Breather After G20 Meeting

XHB- Old Chart Highs Become Support
XHB- Old Chart Highs Become Support

Monday, February 27, 2012
Stock Market Commentary:

Stocks and a slew of other risk assets ended mixed after the G-20 concluded said that European countries should sort their finances out on their own. 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. Leadership continues to improve which is another healthy sign

G-20 Does Not Rescue Europe; Pending Home Sales Surge In The U.S.:

Over the weekend, the G-20 concluded their latest meeting in Mexico and told European leaders that they need to resolve their fiscal woes on their own. Initially, this put a little pressure on equities and other risk assets and added pressure on Germany, Europe’s largest economy, to save the so-called PIIGS. Euro zone countries are going to reassess the strength of their bailout fund in March. Until then, the ECB’s LTRO program appears to be picking up the slack. In the U.S., pending home sales surged +8.0% vs. January 2011 and hit a two-year high. Again, as we have said several times in this column, housing stocks appeared to have bottomed and look great here.

Market Outlook- Confirmed Rally

Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. All this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought. As always, keep your losses small and never argue with the tape. 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

  • Week-In-Review: Market Finally Pulls Back…(A Little)

    Market Finally Pulls Back Overall, the major indices continue trading in a very tight range after a very strong ~10% post-brexit rally. So far, the action is normal and very healthy as the market appears to be pulling back from very extended conditions. Remember, there are two ways a market can pullback after a big rally: mover…

  • Stocks Bounce Back From Egregiously Oversold Levels

    Market Action- Market In A Correction; 28-Week Rally Ends
    All the major averages sliced below their respective 50 DMA lines on Thursday, March 10, 2011 and continued falling since then. Thursday, March 17, 2011 marked day 1 of a new rally attempt which means that the earlest a possible follow-through day (FTD) could emerge would be Tuesday, as long as Thursday’s lows are not breached. However, if Thursday’s lows are breached, then the day count will be reset and odds will favor lower prices, not higher, will follow. It is important to note that the recent ominous action reiterates the importance of raising cash and playing strong defense until a new FTD emerges. If you are looking for specific help navigating this market, please contact us for more information.
    Don’t Miss Out!
    Have You Seen How Our New Site Can Help You!
    Visit: www.SarhanCapital.com Today!

  • Strong Week on Wall Street; New Rally Confirmed!

    Market Action-Confirmed Uptrend
    From our point of view, the market is back in a confirmed uptrend after a modest (and healthy)-6% correction from its post-recovery highs. The fact that the Dow Jones Industrial Average, small-cap Russell 2000 index, and Copper all closed above their respective 50 DMA lines on Wednesday March, 23 was a very healthy sign and suggests higher prices will follow. The very next day, the benchmark S&P 500 regained that important level and broke above its downward trendline (shown above). Couple that with the fact that other markets like Oil, Silver, and Gold are all at fresh post recovery highs suggests it is only a matter of time until equities follow. The final bullish sign for us was that a slew of high ranked stocks triggered fresh technical buy signals this week which suggests higher, not lower prices lie ahead! If you are looking for specific help navigating this market, please contact us for more information.
    Don’t Miss Out!
    Have You Seen How Our New Site Can Help You!
    Visit: www.SarhanCapital.com Today!

  • Stocks Rally On Day 5 Of A New Rally Attempt

    Looking at the market, as long as last Friday’s lows are not breached, the window is now open for a new follow-through day (FTD) to emerge. A new follow-through day will be confirmed when one of the major averages rallies at least +1.7% on higher volume than the prior session as a new batch of leaders breakout of sound bases. However, if last Friday’s lows are breached then the day count will be reset and a steeper correction may unfold.

  • Happy Birthday Bull Market!

    Market Action- Rally Under Pressure; Week 28
    It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November, January, late February, and early March. From our point of view, the market remains in rally-mode 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. If you are looking for specific high ranked ideas, please contact us for more information.
    Have You Seen Our New Site?