Daily Market Commentary

ECB Raises Rates; U.S. Jobless Claims Fall & Another Earthquake in Japan!

Thursday, April 7, 2011
Stock Market Commentary:

Stocks were relatively quiet on Thursday as investors digested a slew of economic data and the European Central Bank’s (ECB) first rate hike since July 2008! It is 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 since 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.

Bank of England Holds Rates Steady, ECB Raises Rates, & U.S. Jobless Claims Fall:

Before Thursday’s open, the Bank of England (BOE) decided to hold rates steady as their economy continues to improve and inflation remains at bay. However, as expected, the ECB raised rates by 0.25 basis points to 1.25% which was their first rate hike since July 2008! Jean Claude Trichet, president of the ECB, said last month that April’s rate hike will “certainly not be the start of a series (of additional hikes) and was only a preemptive measure to curb inflation. Overnight, Portugal asked the EU for an emergency bailout as that country’s finances continue to deteriorate. In the U.S., the Labor Department said jobless claims fell –10,000 to 382,000 last week which is an encouraging sign for the ailing jobs market. Elsewhere, a slew of large retail stores reported same store numbers which failed to impress the Street. Less than one hour after the open, Japan was rocked with a 7.4 magnitude earthquake which sent stocks into the red. However, after the knee-jerk reaction, the major averages edged higher and were quit for the rest of the day.
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 bullish to see the mid-cap S&P 400 index and the small cap Russell 2000 index both hit fresh all-time highs! 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.