Wednesday, February 08, 2012
Stock Market Commentary:
World Awaits Greek Bailout & Earnings Mixed To Slightly Higher:
Stocks were quiet again on Wednesday as the world continued to wait for a solution to the second Greek bailout and the latest round of earnings were released. Economic data was light, the Mortgage Bankers Association said weekly mortgage applications rose sharply last week which was another sign of a bottom in the ailing housing market. As we have said since the end of 2011, the housing stocks have appeared to have traced out a near term bottom and they usually move 3-9 months before the housing market moves. Therefore, if they continue to rally we have to believe that a bottom is in place for the ailing housing market. Earnings data was mixed but the market’s reaction so far has been positive.
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!