Stocks End Mixed As Investors Digest A Slew of Earnings

Monday, April 19, 2010
Market Commentary:

The major averages ended mixed after Daimler AG (DAI +5.70%) & Citigroup (C +7.02%) reported better-than-expected results and news broke that the Securities and Exchange Commission did not unanimously approve pursuing a case against Goldman Sachs Group Inc. (GS +1.63%). As expected, volume, an important indicator of institutional sponsorship, slid compared to Friday’s heavy options related totals. Decliners led advancers by nearly a 11-to-8 ratio on the Nasdaq exchange and by nearly a 17-to-10 ratio on the NYSE. New 52-week highs still easily trumped new lows on both exchanges. There were only 16 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 37 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally. Regular readers know we have repeatedly noted in this commentary -“the recent expansion in leadership has been a welcome improvement.”

SEC Split On Goldman Case & Healthy Earnings Lift Stocks:

Goldman Sachs, ended higher but below its 50 DMA line after word spread that the SEC voted 32 (along party lines) to charge the investment giant with fraud. Citigroup gapped higher and closed near its intraday high after reporting solid Q1 results. The company said earnings more than doubled in the first quarter and said it would not be here without the help of the US taxpayer. Auto giant, Daimler AG rallied after posting preliminary profit of 1.2 billion euros ($1.62 billion). After Monday’s close, International Business Machine (IBM X%) reported stronger than expected Q1 results. The company also raised its full year EPS to $11.20, from $11.12. In addition, Goldman is slated to report their Q1 results on Tuesday.

Market Action- Rally Under Pressure

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. Trade accordingly. 
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