Stocks Bounce Off Support

Byinfo@50park.com

Monday, June 27, 2011
Stock Market Commentary:

Stocks bounced off support (200 DMA line) on Monday as investors continue to wait for a near term solution for Greece. This will be a busy week for investors as a slew of economic data will be released (shown below), QE 2 and the second quarter will end. The major averages remain trapped in the middle of their multi-week sideways trading range with support near the 200DMA and resistance near the recent chart lows (SPX 1294) and then the 50DMA.

Monday: Greece Austerity Vote Nears & U.S. Consumer Spending Unchanged

On Monday, stocks bounced as investors waited for the Greek government to vote on the latest round of austerity measures. U.S. consumer spending was unchanged in May for the first time in almost a year. The Commerce Department said consumer spending was flat, following 10 straight monthly gains and followed a downwardly revised +0.3% gain in April. The unchanged reading was slightly lower than the Street’s +0.1% forecast. After adjusting the data for inflation, spending slid -0.1% in May which does not bode well for the ongoing economic recovery.
Market Outlook- Market In A Correction:
The market is back in a correction after another failed follow-through day on Tuesday, June 21, 2011. Now that we are back in a correction, defense remains the best offense. The next level of support for the major averages is their respective 200 DMA lines and then their March lows. The next level of resistance for the major averages is their respective 50 DMA lines. Trade accordingly.
For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday, June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. On June 21, 2011 we changed our Market Outlook to a “Confirmed Rally” after the latest FTD was produced. Two days later, on Thursday, June 23, 2011, our outlook changed to “Market In A Correction” after the market sold off hard on renewed economic woes. 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!

 
 
 
MONDAY: Consumer Spending, Earnings from Nike
TUESDAY: S&P Case-Shiller home price index, consumer confidence, 5-yr note auction, IMF board to select new chief
WEDNESDAY: Weekly mortgage apps, pending home sales index, oil inventories, 7-yr note auction, farm prices, Dell analyst meeting, Fed meeting on card fees; Earnings from Family Dollar, General Mills, KB Home, Monsanto
THURSDAY: Q2 Ends, Weekly jobless claims, Fed’s Bullard speaks, Chicago PMI, End of QE2, Marathon Oil split takes place
FRIDAY: Q3 Begins, Consumer sentiment, ISM mfg index, construction spending, Biden’s deadline for deficit plan, HP launches TouchPad, auto sales
Source: CNBC.com
 

Similar Posts

  • Relatively Flat Week on Wall Street

    Byinfo@50park.com

    The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong. Looking forward, the window is open for disciplined investors to carefully buy high-ranked stocks, while many pundits are expecting that markets may consolidate following recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

  • Stocks Tank On Tepid Jobs Report; Euro Plunges To A New Multi-Year Low!

    Byinfo@50park.com

    The author of “How To Make Money In Stocks”, the book that explains the fact-based investment system, has observed in the past that a market should not be considered to be in “healthy” shape unless at least 2 of the 3 major averages are trading above their rising 200-day moving average (DMA) lines. Only the Nasdaq Composite Index is currently above its long-term average, meanwhile the S&P 500 and Dow are encountering resistance. It would be very encouraging to see a proper follow-through-day (FTD) emerge for the benchmark S&P 500 and the Dow Jones Industrial Average to offer additional confirmation of a hearty new rally. Yet, acknowledging that we have a new confirmed rally based on the latest market improvements, the window is now considered to be open again to begin buying high-ranked stocks that trigger new technical buy signals but caution is sometimes the better part of valor.

  • U.S. Stocks; Forming A New Base

    Byinfo@50park.com

    Mortgage Apps Fall & Produce Price Index Jumps!
    Before Wednesday’s open, the Mortgage Bankers Association (MBA) said mortgage applications slid by a disturbingly large -9.1%. The report blamed tepid economic conditions and a volatile stock market for the two primary reasons behind the large decline. Separately, the Labor Department said its produce price index (PPI) rose +0.2% despite lower energy prices. Core prices, which exclude food and energy, rose +0.4% which was the largest increase since January and rose +0.3% in June. Since the March 2009 bottom, inflation has remained largely at bay which has helped alleviate pressure on the Federal Reserve to raise rates. However, if inflation swells over the next few quarters than the Fed may be put in a precarious situation; raise rates to curb inflation or leave rates low to stimulate the stale economy?

  • Stocks Rally On ADP Jobs Report

    Byinfo@50park.com

    Market Action-Confirmed Uptrend
    From our point of view, the market is back in a confirmed uptrend after a modest (and healthy) -6% correction from its post-recovery highs. The fact that the Dow Jones Industrial Average, small-cap Russell 2000 index, and Copper all closed above their respective 50 DMA lines on Wednesday March, 23 was a very healthy sign and suggests higher prices will follow. The very next day, the benchmark S&P 500 regained that important level and broke above its downward trendline (shown above). Couple that with the fact that other markets like Oil, Silver, and Gold are all at fresh post recovery highs suggests it is only a matter of time until equities follow. The final bullish sign for us was that a slew of high ranked stocks triggered fresh technical buy signals this week which suggests higher, not lower prices lie ahead. If you are looking for specific help navigating this market, please contact us for more information.
    Don’t Miss Out!
    Have You Seen How Our New Site Can Help You!
    Visit: www.SarhanCapital.com Today!