Daily Market Commentary

Japan's Credit Cut & Durable Goods Top Estimates

Wednesday, August 24, 2011
Stock Market Commentary:

Stocks confirmed their latest rally attempt on Tuesday when the tech-heavy Nasdaq composite surged +4.29% on heavier volume than Monday’s session. This confirmed the latest rally attempt which began 11 days ago on August 9, 2011. The major averages are technically in a new confirmed rally which means probing the long side may be prudent, if/when high ranked stocks begin to trigger fresh technical buy signals. Even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

Japan’s Credit Cut & Durable Goods Top Estimates:

On Wednesday, Moody’s cut Japan’s credit rating one step to Aa3, with a stable outlook as the nation continues to work its way out of the horrible earthquake back in March. In the U.S., the Commerce Department said durable goods jumped +4% last month which easily topped the average estimate of +2%.

Market Outlook- New Rally Confirmed!

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. This action suggests a subtle and bullish shift may be on the horizon. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

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