Daily Market Commentary

Stocks Drift Lower On Last Day Of Q3

Thursday, September 30, 2010
Stock Market Commentary:

Stocks fell on Thursday as investors digested the latest round of economic data and more negative news from Europe was announced. Volume totals were reported higher on the NYSE and on the Nasdaq exchange compared to Wednesday’s session which marked the latest distribution day and signaled that large institutions were aggressively selling stocks. Advancers were about even with decliners on the NYSE and on the Nasdaq exchange, while new 52-week highs easily outnumbered new 52-week lows on both exchanges. There were 77 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, slightly higher from the 75 issues that appeared on the prior session.

Economic Data Is Decent But Spain’s Downgrade Hurts Stocks:

Before Thursday’s opening bell, the government released two stronger than expected economic reports which helped lift futures. The Commerce Department said the final read on Q2 GDP was +1.7%, higher than the prior estimate of 1.6%. Elsewhere, the Labor Department said initial jobless claims fell -16,000 to 453,000 last week. At 10:00AM EST, the Chicago PMI topped estimates which helped send stocks higher. In Europe, Spain’s credit rating was cut one level from AAA to Aa1. Had this event occurred three months ago, the euro and major equity markets around the world would have been fallen sharply. Therefore, the somewhat muted decline suggests a strong environment.

Market Action- Confirmed Rally:

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) last week. 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.

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