Another Quiet Day On Wall Street

Byinfo@50park.com
SPX- Normal Consolidation After Strong Rally
SPX- Normal Consolidation After Strong Rally

Wednesday, March 28, 2012
Stock Market Commentary:

Stocks and other risk assets fell on Wednesday after the latest round of economic data was released. 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. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 paused near its 2011 high (~1370) before moving higher and that level should now become support. The next level of support would be the 50 DMA line, then a deeper 5-9% pullback. It is important to note that the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.

Economic Fears Resurface:

Stocks fell on Wednesday as investors digested the latest round of mixed economic data. The Mortgage Bankers Association said weekly mortgage applications rose last week which bodes well for the ongoing housing recovery. The report showed that refinancing demand slid for a 6th consecutive week as interest rates edged higher. Meanwhile, the Commerce Department said durable goods missed estimates and rose at +2.2% in February. Future business investment also missed forecasts. Separately, investors were concerned after Ben Bernanke told ABC News Tuesday evening that the economy is still not out of the woods yet which raised the odds for QE3. Bernanke’s main concern is that this recovery is a shallow version of the Great Depression. After the 1929 meltdown (similar to 2008) the economy and stock market briefly rebounded before relapsing (largely due to poor decisions from the Government regarding both fiscal and monetary policy) in the mid 1930’s. The only thing that saved the economy in the late 1930’s was World War II. Bernanke doesn’t want to make the same mistake.

Market Outlook- Confirmed Rally

After a brief pullback most risk assets (mainly stocks and a slew of commodities) are back in “rally-mode” evidenced by the strong rally we have seen in recent days. This shallow pullback is considered healthy and shows how strong the bulls are at this point. However, if sellers show up and support is breached then the bears will have regained control of this market. 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!
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Fed’s Bullard speaks, FDA discusses obesity drugs
THURSDAY: GDP, jobless claims, corporate profits, Fed’s Plosser speaks, 7-yr note auction, farm prices, Fed’s Lacker speaks; Earnings from Best Buy, Research In Motion
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Stringer’s last day as Sony CEO
Source: CNBC.com
 

Similar Posts

  • Summer Highs Are Breached, Next Stop; April's Highs

    Byinfo@50park.com

    The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong. Looking forward, the window is open for disciplined investors to carefully buy high-ranked stocks, while many pundits are expecting that markets may consolidate following recent gains. It is very encouraging to see the major averages and several leading stocks break above stubborn resistance levels and continue marching higher. All the major averages rallied and managed to stay above their respective 200-day moving average (DMA) lines last week, which is another encouraging sign. Now that the summer highs are breached, the next important resistance level for the major averages are their respective April highs.

  • 7-Week Rally Under Pressure

    Byinfo@50park.com

    Stocks tanked on Friday after several high profile companies released their Q1 results and the SEC charged Goldman Sachs with fraud. Our primary concern before the SEC/GS news was released was the ominous action in shares of GOOG, ISRG and BAC after releasing their Q1 results. Longstanding readers of this column know how much we focus on how the market reacts to the news, not just the news itself. That said, the fact that these leaders reacted poorly to bullish quarterly results suggests that the much anticpated pullback may have begun. Then the SEC/GS news broke, which was the proverbial icing on the cake. At this point, the major averages have been steadily rallying since early February and a pullback of some sort should be expected. Since the March 1, 2010 follow-through day there have been 6 distribution days on the S&P 500 which is more than enough to put pressure on this 7-week rally. Trade accordingly.

  • Week-In-Review: Stocks End Mixed On Trump's 5th Week In Office

    Byinfo@50park.com

    Stocks End Mixed On Trump’s 5th Week In Office Stocks ended mixed to mostly higher on Trump’s 5th week in office. The relentless rally, coupled with the inability for stocks to fall in a meaningful fashion, illustrates how strong the bulls are right now. The more we scan the market and look at leading stocks,…

  • Week-In-Review: Stocks Smacked As Earnings Season Begins

    Byinfo@50park.com

    Stocks Fall As Earnings Season Begins Stocks fell hard last week as earnings season officially began. It was a volatile and important week because the Nasdaq 100 hit a fresh record high on Monday, then sellers showed up and sent stocks lower for the rest of the week. On Monday, the Nasdaq 100 jumped to a…

  • Week In Review: Leaders Get Hit As Market Churns

    Byinfo@50park.com

    Initially, the market rallied on the jobs report but sellers quickly emerged which put pressure on the market. It was disconcerting to see a several high profile leaders such as Apple Inc. (AAPL -1.61%) and Netflix (NFLX -3.04%) get smacked on Friday. Apple, one the strongest stocks since the March lows, triggered a technical sell signal when it violated its well defined 8-month upward trendline and its 50 DMA line on Friday. This was the first time since the March low that Apple closed below support (its upward trendline and 50 DMA line). Volume surged as the stocks fell which indicated that large institutional investors were unloading their positions, not Aunt Mary or Uncle Bob. The dollar rallied sharply after the jobs report was released which put pressure on a slew of commodities, mainly gold. Gold plunged sharply today which dragged a slew of gold related stocks. Remember that gold has been one of the strongest performing groups in recent weeks and now that it has fallen, a new group will need to emerge to carry this market higher. That coupled with the recent questionable action in the major averages and the dearth of leadership suggests this rally is “under pressure” which means caution is advised.

  • Stocks Rally on Strong Economic Data

    Byinfo@50park.com

    It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. The market remains in a confirmed rally 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. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.