Stocks Got Smacked As The Dollar Rallies:

Stocks fell across the globe as the US dollar rallied and concern spread regarding the underlying health of the economic recovery. Volume, a critical component of institutional demand, was higher than Wednesday’s levels across the board which marked a distribution day for the major averages. Decliners trumped advancers by about a 4-to-1 ratio on the NYSE and Nasdaq exchange. There were only 10 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, lower than the 40 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Tepid Economic Data Hurts Stocks

Stocks experienced their largest intra day decline this month after the latest round of ominous economic data was released. The tepid economic data led many to question how long the global economic recovery will last and sent investors flocking to the US dollar for perceived safety. Before Thursday’s opening bell, the Labor Department said jobless claims (a.k.a the number of Americans filing claims for unemployment benefits) was unchanged at a 10-month low. Stocks also got hit after a report was released that showed mortgage delinquencies surged. So far, since the financial crisis began in 2007, writedowns (a.k.a losses) of mortgage-backed debt has surpassed $1.7 trillion at some of the world’s largest financial firms. The spike in mortgage delinquencies was due to a 26-year high in unemployment and a down tick in wages. The Mortgage Bankers Association said that that out of every six home loans insured by the Federal Housing Administration there is at least one late payment and +3.32% of those loans were in foreclosure last quarter. This was the highest reading for both measures in at least 30 years and bodes poorly for the troubled housing market.
Elsewhere, the Organization for Economic Cooperation and Development (OECD) doubled its growth forecast for industrialized nations in 2010 to +1.9%. However, the group said that record debt levels may hinder future growth. Separately, the Federal Reserve Bank of Philadelphia released its general economic index which topped estimates and suggests a slight improvement in that region. Billionaire investor, Bill Gross, who runs the world’s largest bond fund- Pacific Investment Management Co. (PIMCO) in Newport Beach, California, published a report today and said that he believes record low interest rates may cause new asset bubbles for stocks and risky bonds.

Looking At The Market- Analyzing Price & Volume:

Looking at the market, leading stocks came under a little pressure today but for the most part continue to hold up well. The market caught a bid (rallied) in the last hour of trade which is typically an encouraging sign and shows that buyers are still out there and willing to show up and defend support. Highly liquid technology stocks continue to be an important area of strength as investors continue to pile into a very narrow group of stocks. Gold and silver stocks are another important area that continues to outperform. As always, it is imperative to isolate strength and let the market guide you.