Markets Tank As Global Economy Slows

Byinfo@50park.com

Wednesday, June 01, 2011
Stock Market Commentary:

Stocks and a host of commodities were smacked on Wednesday after manufacturing data slowed markedly across the globe, Greece’s debt rating was cut even further into junk status, and jobs data disappointed in the U.S. Stocks gave back Tuesday’s gains and fell back into the multi month downtrend which suggests more sluggish action lies ahead. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly.  From our vantage point, the market is back in a correction as the major averages are now flirting with their multi-month upward trendlines.

Global Manufacturing Slows, Greek Debt Slashed, & Dismal Jobs Report In the U.S.

Manufacturing growth slowed from all corners of the globe in May which added to concerns that the global recovery may be slowing. China and Europe’s purchasing managers’ index showed the slowest rate of growth in nine and seven months, respectively. U.S. factory growth was anemic, falling to the lowest level in one year while manufacturing growth slowed to a virtual standstill in Russia, Poland, and Hungary. Moody’s rating agency slashed Greece’s credit rating further into junk territory on Wednesday which led many to question the healthy of the euro.
In other news, ADP, the U.S.’s largest private payrolls company said US employers added fewer jobs than expected in May. The report showed payrolls increasing by +38,000 which was the smallest increase since September 2010 and much lower than the Street’s estimate for an increase of +175,000. Some of the factors that are threatening the global recovery are: rising oil prices, aftermath of Japan’s earthquake, Europe’s ongoing debt crisis, and the age of the recovery (growth tends to be strongest in the early stages of a recovery before leveling out as the recovery losses steam).

Market Outlook- Market In A Correction

From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and downward trendlines. Since the beginning of May, we have urged caution as the major averages and a host of commodities began selling off. The next level of resistance is their respective 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.


Stock Market Research?

Global Macro Research?

Want To Follow Trends?

Learn How We Can Help You!

 
 

Similar Posts

  • Earnings Season Begins Stocks; Stocks Fall

    Byinfo@50park.com

    For the most part, the major averages and leading stocks are beginning to weaken as investors continue to digest the slew of economic and earnings data being released each day. Until a clear picture can be formed as to how companies fared last quarter one could easily expect to see more of this sideways action to continue. The market just completed its 45th week since the March lows and the rally remains intact as long as the major averages continue trading above their respective 50-day moving average (DMA) lines. Until those levels are breached, the bulls deserve the benefit of the doubt.

  • Volatile Month Finally Ends!

    Byinfo@50park.com

    Market Outlook- Confirmed Rally!
    The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. 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.

  • 1 Year Anniversary From The '09 Lows

    Byinfo@50park.com

    Looking at the market, since last Monday’s follow-through day (FTD), the market and a batch of leading stocks, steadily rallied which is a healthy sign. The fact that we have not seen any serious distribution days show up since Monday’s FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

  • Stocks End Lower on Weaker Economic Data

    Byinfo@50park.com

    At this point, the Dow Jones Industrial Average and the NYSE Composite Index have traded above resistance at their long term 200-day moving average (DMA) lines and recent chart highs. The tech-heavy Nasdaq Composite, benchmark S&P 500, and small-cap Russell 2000 index remain slightly below their recent chart highs. However, the fact that all of the major averages are trading above their respective 2-month downward trendlines bodes well for this five week rally. In order for a new leg higher to begin, all the major averages must close and remain above their respective resistance levels. Remember that the window remains open for for high-ranked stocks to be accumulated when they trigger fresh technical buy signals. Trade accordingly.