Daily Market Commentary

Another Strong Week on Wall Street!

01 Apr

Friday, April 1, 2011
Stock Market Commentary:

Stocks enjoyed their best quarterly advance since 1999 which bodes well for the current 2-year bull market. It was encouraging to see a slew of leading stocks and the benchmark S&P 500, Dow Jones Industrial Average, Nasdaq composite, and small cap Russell 2000 index all close and stay above their respective 50 DMA lines in late March. The 28-week rally, which began on the September 1, 2010 follow-through day (FTD), ended on Thursday March 10, 2011 when all the major U.S. averages plunged below their respective 50 DMA lines in heavy trade. However, the correction was short lived when a new rally was confirmed on Thursday March 24, 2011′s healthy action. Since then, the action remains healthy which suggests the bulls are back in control of this market.

Monday & Tuesday’s Action: Stocks Look Past Weaker Than Expected Economic Data

Before Monday’s open, consumer spending in the U.S. rose more than forecast as incomes rose. The Commerce Department said purchases rose +0.7% in February which was the strongest increase since October 2010 and bodes well for the economic recovery. Meanwhile, U.S. income rose +0.3%, less than forecast, as the Federal Reserve’s preferred measure of inflation rose. Elsewhere, according to Bloomberg, U.S. corporations are beginning to spend the record $940 billion in cash they have accumulated after the credit crisis. Out of the U.S. corporations that have tapped their cash reserves the lion share have decided to pursue strategic mergers and acquisitions. M&A’s topped $256 billion in Q1 2011 which is the highest level since the collapse of Lehman Brothers Holdings Inc. in September 2008. So far in Q1 2011, companies in the S&P 500 have authorized +38% more buybacks in han the same period in 2010 and dividends may increase to a record $31.07 a share in 2013, according to data complied by Bloomberg.
Before Tuesday’s open, the S&P/Case-Shiller index of home prices in 20 major cities slid -3.1%from January 2010 which was the largest year-over-year decline since December 2009. The decline was the latest in a series of weaker than expected data from the ailing housing market. After the open, the latest reading on consumer confidence missed estimates. The Conference Board’s consumer confidence index fell to a three month low of 63.4 which was lower than the Street’s forecast of 65. The down tick in consumer confidence was largely attributed to surging energy prices.

Wednesday-Friday’s Action: Best Q1 Since 1999 & Healthy Jobs Data:

Before Wednesday’s open, ADP, the country’s largest private payrolls company, said U.S. employers added 201,000 jobs in March. The report was just shy of the Street’s 205k estimate but bodes well for Friday’s official non farm payrolls report. Elsewhere, Portugal’s five-year bond yield jumped above +9% for the first time since the euro’s inception in 1999! Keep in mind, that the first quarter will end on Thursday and a lot of last minute “window dressing” is likely occurring. Before Thursday’s open, the Labor Department said initial jobless claims fell by -6,000 to a seasonally adjusted 388,000 last week. This was better than the Street’s estimate for a decline of -2,000 but the prior week’s numbers were revised up to 394,000 from an originally reported382,000. Stocks rallied on Friday after the Labor Department said U.S. employers added 216,000 new jobs in March and U.S. manufacturing topped estimates. For the quarter, the small cap Russell 2000 index topped its peers, rallying +7%. Elsewhere, the Nasdaq composite rose +4.5%. The benchmark S&P 500 and the Dow Jones Industrial Average both rose +5.5% and +6.6%, respectively.

Market Action-Confirmed Uptrend

The market is back in a confirmed uptrend after a modest (and healthy) -6% correction from its post-recovery highs. We find it very bullish to see the mid cap S&P 400 index hit a fresh all time high and the small cap Russell 2000 index flirt with its all time high. in addition, the Dow Jones Industrial Average vaulted to a fresh post-recovery high and the S&P 500 and Nasdaq composite are just shy of fresh 2011 highs! Finally, we are very happy to see a slew of high ranked stocks trigger fresh technical buy signals in recent weeks which suggests higher, not lower prices lie ahead. If you are looking for specific help navigating this market, please contact us for more information.

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27 Dec
Daily Market Commentary

Another Strong Week On Wall Street

SPX-STOCK MARKET COMMENTARY:
FRIDAY, December 27, 2013

Stocks raced to new highs as the bulls bid prices higher on this shortened holiday week. Starting next month, the Fed will be printing $75B each month instead of $85B, which is still very bullish for stocks. Technically, the action continues to be very bullish as the market as the benchmark S&P 500 found support and bounced perfectly off its 50 DMA line in the middle of December. As long as support holds, by definition, the bulls remain in control of this market. As we have mentioned several times this year, we are in a very strong bull market and pullbacks should be bought, not sold. In the short term, the market is clearly extended and due for a another short term shallow pullback. Meanwhile, the intermediate and long term outlook remain very bullish as the major averages and a slew of leading stocks continue to act very well.

MONDAY-WEDNESDAY’S ACTION: Santa Visits Wall Street

Stocks rallied on Monday as investors prepared for a shortened holiday week. Tech stocks, such as Apple (AAPL) and Facebook (FB), led the rally. Consumer confidence jumped to a 5-month high and consumer spending also rose. Over the weekend, Apple and China Mobile (CHL), the largest mobile phone company in the world, announced a deal to start selling iPhones to their subscribers. Other phone carriers have been selling Apple products in China but CHL has the largest base of clients in the world. Separately, Facebook jumped nearly 5% and hit a new record high on the first day trading in the S&P 500.
Stocks closed early on Tuesday and were closed on Wednesday in observance of Christmas. Before Tuesday’s open, durable goods rose 3.5% in November which easily topped estimates. Separately, retail sales, not including online (which is in today’s world is where most people shop), fell by -3.1% between Dec 16 and Dec 22. We find it important to note and bullish for the market and the economy that a slew of housing stocks are beginning to rally. A slew of financials (XLF) broke out in November and now a slew of housing stocks (XHB) are breaking out of multi-month bases. These are two important areas of the market and the fact that they are rallying bodes well for the economy and the market.

THURSDAY & FRIDAY’S ACTION: Stocks Edge Higher After Xmas

Stocks rallied on Thursday as traders returned from the Christmas holiday. According to the latest data, the S&P 500 has rallied nearly 83% on the day after Christmas. Amazon.com said it will refund shipping chargers to customers affected by any late shipments over Xmas. Shares of T-Mobile US (TMUS) rose after Reuters reported that Japan’s SoftBank is in talks to acquire the wireless carrier. Their plan is merge Sprint (S) with TMUS. Elsewhere, Tesla Motors (TSLA) jumped 3% after a China Daily report said the company will launch additional showrooms in China in 2014. Before Thursday’s open, the labor department said weekly jobless claims fell by 42k to 338k. CNBC reported that of the 249 trading days completed in 2013, the DJIA closed at an all-time high 50 times, while the S&P 500 has finished at a record high 44 times which clearly indicates how strong the market is right now. Stocks were quiet on Friday as the market digested the week’s strong action.

MARKET OUTLOOK: BULLS ARE IN CONTROL

As we have been saying all year, the market is very strong in all three time-frames: short, intermediate, and long. The last pullback was shallow in size (%decline) and scope (days/weeks, not months).  As always, keep your losses small and never argue with the tape.

16 Mar
Daily Market Commentary

Another Strong Week On Wall Street!

SPX- Strong Breakout and Close This Week

SPX- Strong Breakout and Close This Week

Friday, March 16, 2012
Stock Market Commentary:

Stocks extended their winning streak as the bulls remained in clear control of this market. 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. At this point, it would be perfectly normal and healthy to see a 5-9% pullback at any point to give the bulls a chance to consolidate the recent gain. That would bring the S&P 500 down to 1320-1260. 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.

Monday-Wednesday’s Action: Fed Stays The Course, Stocks Rally, Led By Financials

Before Monday’s open, China said its trade balance unexpectedly slowed last month. China said its trade balance slid $31.5 billion into the red in February as imports trumped exports. This was the country’s largest trade deficit in at least a decade and cast doubts regarding the ongoing global recovery. Import growth surged +39.6% on the year in February which easily topped the Street’s +27% forecast. Meanwhile, exports grew by +18.4% which was just more than half of the Street’s expectation and hit a six month high.
Before Tuesday’s open, Germany said its ZEW survey for March, which measures economic expectations, surged to 22.3 which easily topped the Street’s estimate for 10. The U.K.’s trade deficit widened slightly but still came in short of estimates for January. The real surprise was that exports to non-European Union countries rose to the highest level in history! On average economic data in the U.S. was also stronger than expected. The warmer weather across the nation helped retail sales jump to the fastest rate in five months in February. Meanwhile, the National Federation of Independent Business’ small-business optimism index increased for the sixth consecutive month to the highest level since December 2007! A separate report showed that business inventories rose by 0.7% which was the largest increase since October. Finally, the Fed concluded its latest meeting, held rates steady and largely reiterated their recently stated cautious but optimistic stance regarding the economy. The Fed’s stress tests were leaked early which helped send a slew of bank stocks soaring before Tuesday’s close.
Stocks were quiet on Wednesday as investors digested Tuesday’s strong move. Before Wednesday’s open, the government said import prices fell short of the Street’s estimate, rising +0.4% in February thanks to a large drop in food prices. Meanwhile, the U.S. current account deficit, jumped to a three-year high of $124.1 billion. A separate report showed that the Mortgage Bankers Association said demand for home loans slid by -2.4% but actually rose 4.4% excluding a drop in refinancing requests last week.

Thursday-Friday’s Action: Bulls Remain In Control

Investors digested a slew of economic data on Thursday. The Labor Department said weekly jobless claims fell to a fresh 4-year low which bodes well for the jobs market and the broader economy. Jobless claims fell by 14,000 to 351,000 last week. Meanwhile, the PPI rose +0.4%, largely due to a jump in energy prices. New York manufacturing rose and topped estimates but showed inflationary pressures are rising. Meanwhile, the Philadelphia Federal Reserve Bank’s business activity index rose for a fifth consecutive month to 12.5 from 10.2 in February. The report topped the Street’s estimate of 12.0. Stocks were quiet on Friday after consumer confidence slid last month due to rising energy prices.

Market Outlook- Confirmed Rally

After a very shallow pullback the majority of risk assets (Stocks, FX, and commodities) have began to rally. So far this action is considered healthy for the risk on trade. However, if sellers show up and support is breached then the bears will have regained control of this market (still a long ways off). 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!
 

03 Feb
Daily Market Commentary

Another Strong Week On Wall Street!

SPX- Stocks Breakout Again

SPX- Stocks Breakout Again

Friday, February 03, 2012
Stock Market Commentary:

Stocks and a slew of other risk assets were relatively quiet ahead of Friday’s much anticapitated nonfarm payrolls report. 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 is doing its best to stay above its Q4 2011′s high (~1292) and now has its sights set on its 2011 high near 1370. In addition, the bulls remain in control as long as the benchmark S&P 500 trades above 1292 and then its 200 DMA line.

Monday-Wednesday’s Action: Stocks Quiet Ahead of Jobs Report

On Monday, stocks and a slew of other risk assets fell as the month of January draws to an end. The news on the economic front did little to help stocks. Personal income rose by +0.5% last month in the U.S. which topped the Street’s forecast for an increase of +0.4%. Meanwhile, spending was flat during the final month of the year which just missed the average estimate for an increase of +0.1%. On Tuesday, stocks were quiet as investors digested the latest round of earnings and economic data. News on the economic front was less than stellar. The S&P/Case-Shiller index fell -1.3% in November which missed the Street’s estimate for a decline of -0.5%. Elsewhere, the Conference Board said consumer confidence unexpectedly declined in January, The index fell to 61.1, missing the Street’s estimate of 68. The Institute of Supply Management said its Chicago business barometer fell to its lowest level since August which is not ideal. Earnings continued to be released in droves with most companies meeting or slightly passing analysts estimates. After all was said and done, stocks and a slew of other risk assets (commodities and currencies) rallied in January, which bodes well for the global economy. On Wednesday, stocks and a slew of other risk assets were relatively quiet as the world awaited Friday’s jobs report.

Thursday & Friday’s Action: Jobs Report Is Strong!

On Thursday, stocks and a slew of other risk assets were relatively quiet as the world awaited Friday’s jobs report. Before Thursday’s open, the Labor Department said weekly jobless claims slid by –12,000 to a seasonally-adjusted 367,000. This bodes well for last month’s jobs report which analysts now believe U.S. employers added 150,000 new jobs with the unemployment rate remaining unchanged at +8.5%. A separate report released from the Labor Department showed that U.S. nonfarm productivity rose at a +0.7% annual rate but just missed the Street’s estimate for a gain of +0.8%. Stocks rallied on Friday after the Labor Department said U.S. employers added 243,000 new jobs last month and the unemployment rate fell to -8.3%.

Market Outlook- New Rally Confirmed

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. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. 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!
 

31 Mar
Daily Market Commentary

Best Q1 Since 1999!

Thursday, March 31, 2011
Stock Market Commentary:

Stocks were quiet on Thursday as the major averages enjoyed their best Q1 since 1999 and traders awaited Friday’s much anticpated jobs report.  It was encouraging to see a slew of leading stocks and the benchmark S&P 500, Dow Jones Industrial Average, Nasdaq composite, and small cap Russell 2000 index all close above their respective 50 DMA lines last week. The 28-week rally, which began on the September 1, 2010 follow-through day (FTD), ended on Thursday March 10, 2011 when all the major U.S. averages plunged below their respective 50 DMA lines in heavy trade. However, the correction was short lived when a new rally was confirmed on Thursday March 24, 2011′s healthy action. The healthy action suggests the bulls are back in control. Interestingly, it took other sources 4 days before recognizing that important fact. We have received a ton of positive feedback about our calls in recent weeks and months, and are happy to be able to help!

Jobless Claims Fall & Market Averages Q1 Results:

Before Thursday’s open, the Labor Department said initial jobless claims fell by -6,000 to a seasonally adjusted 388,000 last week. This was better than the Street’s estimate for a decline of -2,000 but the prior week’s numbers were revised up to 394,000 from an originally reported 382,000. The up tick in jobs bodes poorly for Friday’s monthly jobs report. Economists believe U.S. employers added 195,000 jobs in March. The Labor Department is slated to release March’s non farm payrolls report before Friday’s open. For the quarter, the small cap Russell 2000 index topped its peers, rallying +7%. Elsewhere, the Nasdaq composite rose +4.5%. The benchmark S&P 500 and the Dow Jones Industrial Average both rose +5.5% and +6.6%, respectively.

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.

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18 Feb
Daily Market Commentary

Another Strong Week On Wall Street

Friday, February 18, 2011
Stock Market Commentary:
Stocks were quiet on Thursday after jobless claims rose more than expected last week and the consumer price index (CPI), which is used to measure inflation, continued to rise last month. The benchmark S&P 500 is up 100% from its March 2009 low, and still about -14% off its all time high from October 2007. On average, market internals remain healthy as the major averages continue marching higher. The fact that the major averages bounced back sharply after a very brief pullback in January illustrates how strong this 25-week rally actually is.

Monday-Wednesday’s Action:

Stocks were relatively quiet on Valetine’s Day after China said its exports surged last month.  China said that exports vaulted +37.7% – more than double December’s rate  – to $150.7 billion. Stronger Chinese exports suggests consumer demand is rising as well. In the U.S., President Barack Obama proposed a budget that would cut the deficit by $1.1 trillion over the next 10 years. The White House said a$3.729 trillion budget in which the deficit rose to $1.645 trillion in fiscal 2011, then will fall sharply to$1.101 trillion in 2012.
The major averages slid on Tuesday after retail sales and U.S. homebuilder confidence missed estimates. After Tuesday’s close, Dell (DELL), the world’s second largest computer manufacturer said earnings and revenue easily topped estimates. This set the stage for a healthy rally on Wednesday. The news on the M&A front was also healthy as Sanofi-Aventis (SASY.PA) said it plans to acquire Genzyme (GENZ) for $20.1 billion in cash and activist investor Nelson Peltz’s Trian Group offered to acquire Family Dollar Stores Inc (FDO) for $55 to $60 per share in cash or $7.6billion.
Housing construction was mixed last month and remained at a very weak levels. Starts advanced while permits fell back. Elsewhere, the producer price index (PPI) rose which suggests inflation is accelerating. The headline number rose +0.8%, matching the median forecast. Core prices, which strip out food and energy, rose+0.5% which topped the Street’s estimate for a +0.2% gain. If inflation continues to accelerate, the Fed will have more pressure to raise rates sooner than expected. A separate report showed industrial production falling to 5.2% from 6.3% in December. At 2pm EST, the FOMC released the minutes of its latest meeting which largely reiterated their recent support for QE II.

Thursday & Friday: Stocks Edge Higher On Stronger Economic & Earnings Data

Before Thursday’s open, the Labor Department said initial jobless claims rose by 25,000 to410,000 last week which topped the Street’s estimate for a gain of 17,000. The Labor Department also released the seasonally adjusted consumer price index which rose by +0.4% last month from December. On a year-over-year basis, prices swelled 1.6% before seasonal adjustments compared to the same period in 2010. However, core inflation, which removes food and energy prices and is considered the Fed’s preferred measure of inflation, increased by +0.2%. The report also showed that the annual underlying inflation rate stood at 1.0% in January which is still under the Fed’s target for 2.0%. At 10AM EST, leading economic indicators showed the economy continued to grow and the Philly Fed survey surged to 35.9, easily topping expectations. Stocks were relatively quiet on Friday as investors digested the week’s impressive move.

Market Action- Confirmed Rally; Week 25 Ends

It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November as this market proves resilient and simply refuses to go down. From our point of view, 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. If you are looking for specific high ranked ideas, please contact us for more information.

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23 Apr
Daily Market Commentary

Another Strong Week on Wall Street

Friday, April 23, 2010
Stock Market Commentary:

The major averages ended higher this week as investors digested the latest round of economic and earnings news. Volume, an important indicator of institutional sponsorship, was reported lower compared to Thursday’s totals. Advancers led decliners by over a 2-to-1 ratio on the NYSE and by a 17-to-10 ratio on the Nasdaq exchange. New 52-week highs again easily trumped new lows on both exchanges. There were 80 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 70 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally.

Monday-Wednesday’s Action:

On Monday, stocks ended mixed after after Daimler AG (DAI +1.79%) and Citigroup (C -0.21%) reported better-than-expected results and news broke that the Securities and Exchange Commission did not unanimously approve pursuing a case against Goldman Sachs Group Inc. (GS -1.04%). Stocks edged higher on Tuesday after after Goldman Sachs (GS) said Q1 earnings almost doubled and reaffirmed that it did not mislead investors. After Tuesday’s close, Apple (AAPL +1.64%) blew away estimates after reporting another gang buster quarter.

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