Daily Market Commentary

Stocks Close Higher On Healthy Earnings Data

Tuesday, April 20,2010
Market Commentary:

The major averages ended higher on Tuesday after Goldman Sachs (GS -2.05%) said Q1 earnings almost doubled and reaffirmed that it did not mislead investors in the SEC case. Volume, an important indicator of institutional sponsorship, slid compared to Monday’s totals. Advancers led decliners by over a 4-to-1 ratio on the Nasdaq exchange and by a 3-to-1 ratio on the NYSE. New 52-week highs still easily trumped new lows on both exchanges. There were only 37 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 16 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally, but that number abruptly contracted amid the latest bout of distribution.

Earnings, Earnings, & More Earnings!

Before Tuesday’s opening bell, investment giant, Goldman Sachs said Q1 earnings rose +61% compared to the first quarter in 2009 as sales surged +21%. Net income, which excludes all misc expenses almost doubled in the first quarter which bodes well for the financial industry. However, the stock encountered resistance near its 50 & 200 DMA lines and closed lower as investors are still concerned about the ongoing SEC investigation.
After Tuesday’s close, three prominent tech stocks released their latest quarterly results: Apple Inc. (AAPL -1.00%), Yahoo! Inc. (YHOO -0.05%), and Cree Inc. (CREE +2.62%) all reported solid quarterly results. All three stocks reported very strong results and blew away analysts estimates so it will be interesting to see how they close tomorrow.  

Market Action- Confirmed Uptrend:

Remember, it is important to note that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. The prior commentary’s observation, “Since the March 1, 2010 follow-though-day (FTD) a handful of distribution days has not been the least bit damaging to the market’s confirmed rally” – was immediately followed with the 6th distribution day for the S&P 500 Index, a sign of mounting pressure on this 8-week rally. However, the fact that we have yet to see a modest pullback bodes very well for the bullish case. Trade accordingly.
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