Thursday, January 27, 2011
Stock Market Commentary:
The major averages traded in a narrow range on Thursday as stronger pending home sales helped offset weaker durable goods and jobless data. The benchmark S&P 500 index managed to hit a new recovery high which took pressure off this current (and robust) 22-week rally. The fact that the bulls showed up and quickly quelled the bearish pressure suggests this rally has more room to go.
Jobless Claims & Durable Goods Miss; Pending Home Sales Beat:
Before Thursday’s open, Standard and Poor’s downgraded Japan’s credit rating to AA- from AA, amid growing debt woes. Japan, the world’s third-largest economy in the world after the United States and China, was downgraded by the Japanese government’s already high debt burden was likely to continue to rise and would only peak during the middle of next decade. In the U.S., weekly jobless claims rose by +51,000 to 454,000 last week which easily topped estimates. Heavy snow in the north east was blamed for the uptick in jobless claims. Elsewhere, durable goods fell -2.5% in December largely due to weakness in aircraft orders. At 10am EST, the National Association of Realtors said pending home sales rose 2% to 93.7 for a fifth consecutive monthly gain. The initial read on Q4 GDP is slated to be released before Friday’s open.
Market Action- Market In Confirmed Rally; Week 22
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines as this market proves resilient and simply refuses to go down. 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. If you are looking for specific high ranked ideas, please contact us for more information.