Busy News Day; Quiet Reaction

Thursday, January 13, 2011
Stock Market Commentary:

The major averages were quiet on a rather busy news day. Heretofore, market internals remain healthy evidenced by broad leadership, favorable volume patterns, a rising advance/decline line, and a healthy number of new highs on both major exchanges.

Bank of England & ECB Hold Rates Steady, Spain’s Debt Sells, U.S. Economic Data:

On Thursday, the Bank of England (BOE) & the European Central Bank  (ECB) held rates steady at record lows and reaffirmed their stimulus measures as the global economy continues to recover. The BOE said it is concerned that inflation is above the government’s +3% limit as it sits at a six-month high. Spain’s debt auction went well which helped allay concerns that the 10th largest economy will need to be bailed out in the near future. In The U.S, the producer price index (PPI)  rose +1.1% from November and topped the +0.8% estimate. Core prices, which exclude food and energy, rose +0.2% which matched estimates. Jobless claims rose to their highest level since October. Elsewhere, the U.S. trade deficit unexpectedly contracted in November to the lowest level in 10 months. The decline was due to faster growth in overseas markets coupled with a weak dollar which boosted demand for U.S. goods and services. The consumer price index, advance retail sales, consumer confidence, and industrial production are all slated to be released on Friday.

Market Action- Market In Confirmed Rally Week 20

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.

Are You Looking For Someone To Manage Your Money?
Our Private Wealth Management Services Can Help You!

Similar Posts

  • Stocks Look Past China's Surprise Rate Hike

    Market Action- Market In Confirmed Rally Week 18
    It is encouraging to see the bulls show up in November and defend the 50 DMA lines for the major averages. 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.

  • 46 Week Rally Ends; Market In A Correction

    The major averages and leading stocks are now in a correction as the major averages sliced and closed below their respective multi month upward trend lines and their 50 DMA lines on Friday. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. The recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. The market just ended its 46th week since the March lows and we are now waiting for a new follow-through day to be produced before resuming any buying efforts. Until that occurs, patience is key, and the path of least resistance is down. Trade Accordingly.

  • Stocks & Commodities Smacked As EU Debt Woes Continue

    Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign and has caused the major averages to all pullback to their respective 50 DMA lines. This is the next important level of support for the major averages and several leading stocks. It is of the utmost importance for the bulls to show up and defend the 50 DMA line in order for this rally to remain intact. Caution and patience is key at this point. Trade accordingly.

  • U.S. Stocks; Forming A New Base

    Mortgage Apps Fall & Produce Price Index Jumps!
    Before Wednesday’s open, the Mortgage Bankers Association (MBA) said mortgage applications slid by a disturbingly large -9.1%. The report blamed tepid economic conditions and a volatile stock market for the two primary reasons behind the large decline. Separately, the Labor Department said its produce price index (PPI) rose +0.2% despite lower energy prices. Core prices, which exclude food and energy, rose +0.4% which was the largest increase since January and rose +0.3% in June. Since the March 2009 bottom, inflation has remained largely at bay which has helped alleviate pressure on the Federal Reserve to raise rates. However, if inflation swells over the next few quarters than the Fed may be put in a precarious situation; raise rates to curb inflation or leave rates low to stimulate the stale economy?

Leave a Reply

Your email address will not be published. Required fields are marked *