Thursday, March 17, 2011
Stock Market Commentary:
Japan’s benchmark Nikkei index fell 1.4% on Thursday after bouncing back nearly 5% on Wednesday. Global stock markets bounced on Thursday after getting smacked on Wednesday due to poor housing data and lousy inflation data from the U.S. The 28-week rally, which began on the September 1, 2010 follow-through day (FTD), ended on Thursday March 10, 2011 when all the major U.S. averages plunged below their respective 50 DMA lines on heavy turnover. The current crisis in the Middle East remains in flux which is putting upward pressure on oil and gold and downward pressure on equities. The benchmark S&P 500 has steadily fallen after briefly being up 100% from its March 2009 low, and still about -18% off its all-time high from October 2007.
Jobless Claims and Consumer Prices Lift Stocks:
Before Thursday’s open, the government said the consumer price index (CPI) rose modestly in February. Headline CPI rose +0.5%, topping the Street’s estimate and came in slightly higher than January’s reading of +0.4%. Core prices, which exclude food and energy, rose +0.2% which matched January’s reading but topped the 0.1% estimate. A separate report showed that jobless claims fell by -16,000 to 385,000 last week. The four-week average, which smooths out the data, fell 7,000 to 386,250 for its best reading since the bottom in March 2009.
Market Action- Market In A Correction; 28-Week Rally Ends
All the major averages sliced below their respective 50 DMA lines on Thursday, March 10, 2011 and have fallen hard since then. Thursday, March 17, 2011 marked day 1 of a new rally attempt which means that the earlest a possible follow-through day (FTD) could emerge would be Tuesday, as long as Thursday’s lows are not breached. However, if Thursday’s lows are breached, then the day count will be reset and odds will favor lower prices, not higher, will follow. It is important to note that the recent ominous action reiterates the importance of raising cash and playing strong defense until a new FTD emerges. If you are looking for specific help navigating this market, please contact us for more information.