Stocks Rally on 1st Trading Day of Q2

Byinfo@50park.com
SPX- Buy The Dips Works
SPX- Buy The Dips Works

Monday, April 02, 2012
Stock Market Commentary:

Stocks and other risk assets enjoyed healthy gains in the first quarter of 2012 as the U.S. economy continues to improve and the EU debt woes have eased materially. For the quarter, the Nasdaq composite surged nearly 19% which was its strongest quarter since 1991! The benchmark S&P 500 jumped nearly 12% or its best quarter sine 1998! Meanwhile, the Dow Jones Industrial Average rose 8%. From our point of view, the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.

U.S. MFG Data Lifts Stocks:

Risk assets rallied on the first trading day of the second quarter after the latest round of economic data was mixed from across the globe. The official Chinese manufacturing data topped estimates but the HSBC manufacturing survey missed. U.S. mfg data also topped estimates which bodes well for the ongoing economic recovery. The ISM said its mfg index rose to 53.4 in March. However, not all the news was bullish. The Commerce Department said construction spending slid -1.1% in February which was the largest decline in 7-months and missed the Street’s estimate for a gain of +0.6%. The big miss came from Europe. The euro zone’s manufacturing sector fell for an eight month and at a faster pace in March which bodes poorly for the EU economy.  It was also worrisome to see that the euro-zone’s unemployment rate vaulted to its highest level in almost 15 years! The fact that stocks rallied on the news bodes well for this rally and illustrates that the bulls are clearly in control at this point.

Market Outlook- Confirmed Rally

Risk assets (mainly stocks and a slew of commodities) jumped after a very shallow pullback, led higher by U.S. equities and agriculture commodities. 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!
 

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    Over the weekend, EU leaders kicked the can down the road and reschedule yet another meeting on Wednesday to tackle their onerous debt levels. Elsewhere, shares of Catepillar Inc. (CAT) gapped up after topping Q3 estimates and raised their 2012 forecasts. The news on the M&A front was healthy- shares of RightNow Technologies (RNOW) and Healthspring Inc. (HS) gapped up after agreeing to be acquired on Monday.
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    The major U.S. averages are back in a new confirmed rally and broke above the mid-point/resistance of their 6-week bullish double bottom base. The benchmark S&P 500 index scored a proper FTD on Tuesday, October 18, 2011, i.e. Day 12, when it rallied over 2% on heavier volume than the prior session. In addition, it is important to note that the bulls scored a victory since many of the major averages closed above their downward sloping 50 DMA lines for the first time since late July! Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. If you are looking for specific help navigating this market, please contact us for more information.
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