Stocks Digest Last Week's Rally

Byinfo@50park.com
SPX- Strong Rally Continues
SPX- Strong Rally Continues

Monday, March 17, 2012
Stock Market Commentary:

Stocks extended their winning streak as the bulls remained in clear control of this market. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 paused near its 2011 high (~1370) before moving higher. At this point, it would be perfectly normal and healthy to see a 5-9% pullback at any point to give the bulls a chance to consolidate the recent gain. That would bring the S&P 500 down to 1320-1260. It is important to note that the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.

Housing Sentiment Holds Steady, Apple Initiates Dividend and Share-buy Back

Before Monday’s open, stocks were mixed overseas as investors digested last week’s strong rally. In the U.S., stocks were relatively quiet on Monday as investors digested last week’s strong move and the latest round of housing data was released. The National Association of Home Builders/Wells Fargo Housing Market Index held steady at 28 in March. The index is still below the boom/bust level of 50 which separates positive and negative sentiment but is now holding at its highest level since June 2007. In other news, AAPL said it will offer a $2.65 dividend and offer a share buy back to help utilize its massive pile of cash.

Market Outlook- Confirmed Rally

After a very shallow pullback the majority of risk assets (Stocks, FX, and commodities) have began to rally. So far this action is considered healthy for the risk on trade. However, if sellers show up and support is breached then the bears will have regained control of this market (still a long ways off). As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!

Similar Posts

  • Stocks Retest Support As The Dollar Advances

    Byinfo@50park.com

    Tuesday’s steep sell off effectively ended the latest rally attempt and sent all the major average back down towards their recent lows. Since the June 15, 2010 follow-through day (FTD), this column has steadily noted the importance of remaining very selective and disciplined because all of the major averages are still trading below their downward sloping 50-day moving average (DMA) lines. Looking forward, the 50 DMA line may act as stubborn resistance and this month’s lows should act as support. It is also worrisome to see the 50 DMA line already slice below the 200 DMA line on the NYSE. This event is known by market technicians as a death cross and usually has bearish implications. Trade accordingly.

  • Week-in-Review: Bears Return After A 6-Week Hiatus

    Byinfo@50park.com

    Stocks Finally Pullback It was an ugly week on Wall Street as the bears returned from a short six week hiatus. Stocks fell hard last week, erased the last three weeks worth of gains, fell over 3.5%, and snapped a 6-week win streak. It was the largest weekly decline for stocks since August and the action suggests the…

  • Stocks End Mixed As Dollar Edges Higher

    Byinfo@50park.com

    The major averages confirmed their latest rally attempt on Tuesday, June 15, 2010 when they produced a sound follow-through day. Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. Technically, it was encouraging to also see the Dow Jones Industrial Average and the benchmark S&P 500 Index rally above their respective 200-day moving average (DMA) lines. Looking forward, the 200 DMA line should now act as support as this market continues advancing, while any reversal would be a worrisome sign.
    Remember to remain very selective because all of the major averages are still trading below their downward sloping 50 DMA lines. It was somewhat disconcerting to see volume remain light (below average) behind the confirming gains. It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.

  • Middle East Riots Shake Stocks!

    Byinfo@50park.com

    Stock market commentary: It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines as this market proves resilient and simply refuses to go down. The market remains in a confirmed rally 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.

  • Strong Start to Shortened Holiday Week

    Byinfo@50park.com

    Market Action- Market In Confirmed Rally; Week 21
    It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. The market remains in a confirmed rally 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. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.

  • Stocks End Mixed After Hitting Fresh 2010 Lows!

    Byinfo@50park.com

    From our vantage point, the latest three day rally failed, evidenced by the ominous action in the major averages since Friday’s jobs report was released. It is well known that a market should not be considered “healthy” unless it trades above its rising 200-day moving average (DMA) line. The fact that all the major averages are below both their 50 & 200 DMA lines bodes poorly for the near term. That said, the bears will likely remain in control until the popular averages close above their important moving averages and the euro catches a bid.