Stocks Continue To Slide
Wednesday, February 23, 2011
Stock Market Commentary:
Stocks were quiet on Wednesday as geopolitical woes continued in the Middle East. The current crisis in Libya remains in flux which is putting upward pressure on oil prices. The benchmark S&P 500 is up 100% from its March 2009 low, and still about -14% off its all time high from October 2007. On average, market internals remain healthy as the major averages pull back towards their respective 50 DMA lines to consolidate their recent move.
Existing Home Sales Surge
The National Association of Realtors said existing home sales rose by +2.7% to a 5.36 million annual rate, exceeding the 5.22 million median forecast last month. However, the report showed that the median home price fell to the lowest level in almost nine years as the number of “distressed sales” (i.e. foreclosures and other distressed properties) soared to a 12-month high. Existing home sales rose to the highest level in eight months which bodes well for the ailing housing market. Elsewhere, oil prices rallied which serves as an indirect tax on the economy. At this stage, the major averages (and a slew of leading stocks) continue to pullback as they retest their respective 50 DMA lines.
Market Action- Rally Under Pressure; Week 26
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November as this market proves resilient and simply refuses to go down. From our point of view, the market remains in rally-mode until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.
