Thursday, February 24, 2011
Stock Market Commentary:
Stocks ended mixed on Thursday as geopolitical woes continued in the Middle East and both oil and gold negatively reversed (on a daily basis) after a large run. The current crisis in Libya remains in flux which is putting upward pressure on gold and oil and downward pressure on equities. 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 pull back towards their respective 50 DMA lines to consolidate their recent move.
Jobless Claims, Durable Goods, & New Home Sales:
The Labor Department said weekly jobless claims fell by -22,000 to a seasonally adjusted 391,000 last week. The drop was seen as a net positive for the economy and the ailing jobs market. Durable goods orders topped estimates which also bodes well for the economic recovery. However, new home sales missed estimates which suggests the sluggish housing market has yet to recover. New home sales tanked -12.6% to a lower-than-expected annual rate of 284,000 units. Regional data was mixed but the South, where unit sales exceed all other regions combined, shows a -12.8% decline. The government is slated to release the latest reading on Q4 GDP before Friday’s open.
Market Action- Rally Under Pressure; Week 26
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines recently which is a healthy sign. From our point of view, the market remains in rally-mode 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 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.