Monday, April 16, 2012
Stock Market Commentary:
Economic Data Not Ideal & Leaders Smacked In Heavy Volume:
The major averages ended mixed on Monday as investors digested the latest round of tepid economic data. However, the real news was the fact that a slew of leaders were smacked in heavy volume! Apple (AAPL), Priceline.com (PCLN), and Google.com (GOOG) were among of the few of the leaders that were smacked in heavy trade. Economic data also failed to impress. Homebuilder sentiment plunged in March which put pressure on a slew of housing stocks and the ailing housing market. New York Manufacturing activity collapsed to 6.56 in April from 20.21 in March. This also missed the Street’s estimate of 18. On a bright note, retail sales rose +0.8% which topped the average estimate for a gain of +0.3%.
Market Outlook- In A Correction
From our point of view, now that all the major averages are below their respective 50 DMA lines suggests the bears are getting stronger. Remember, it is quite normal to see markets pullback to digest their latest move but from a risk/reward standpoint, being heavily long when all of the popular averages are below their respective 50 DMA lines does not offer an optimal risk/reward level. However, once these major averages get back their respective 50 DMA lines, then one can easily return to the long side. 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!
Due to time constraints, this commentary will become a weekly note starting May 1, 2012.
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