Stocks and a slew of other “riskon” assets bounced from deeply oversold levels as hope spread that another round of global monetary easing will curb the economic slowdown across the globe. In early May, all the major averages sliced below their respective 50 DMA lines which prompted us to label this market “in a correction.” For the past few weeks, we have written about the importance of being defensive especially because the action in the major averages and a slew of leading stocks deteriorated. After the sharp fall, the bulls showed up and are doing their best to defend the longer term 200 DMA lines for the major averages. If that level is “broken” on a closing basis- then we have to expect another leg lower to begin.
Stocks rallied on Monday erasing earlier losses and marked Day 1 of a new rally attempt. Stocks looked passed a lackluster non-manufacturing PMI reading from China and were hopeful that the EU crisis was not deteriorating further. The CRB Commodity Index managed to snap a four day losing streak which also helped stocks rally. The euro, which is a great barometer for “riskon” assets, also rallied from deeply oversold levels which paved the way for a “riskon” day.
Stocks rallied on Tuesday after the latest round of economic data was mixed. European retail sales slid but non-manufacturing PMI improved marginally. Finance ministers from the G7 held an emergency teleconference but failed to come up with any ground breaking solutions. The latest ISM Services Index rose to 53.7 in May from 53.5 in April. Moody’s one of the popular rating agencies, slashed the ratings on several European banks.
Stocks extended their gains on Wednesday after the ECB held rates steady at 1% and optimism spread. The ECB held its key interest rate unchanged at 1% which matched expectations. ECB President Mario Draghi said the central bank will do its best to curb inflation but added that inflation pressures remain subdued. Draghi also said the ECB expects inflation should remain above 2% for the rest of 2012 and then fall to 1-2% in 2013.
Thursday & Friday’s Action- Stocks Slide As Enthusiasm Wanes:
Before Thursday’s open, China lowered their interest rates by 25 basis points to 6.31% to help boost their “sagging economy.” The PBC move was not expected and helped send a slew of risk assets higher. Janet Yellen, the vice chair of the Fed, gave a speech in Boston where she made a case for another round of monetary easing to protect and stimulate the US economy from the impact of the euro zone debt crisis. After the open, Bernanke testified before the Congressional Joint Economic Committee and reiterated his recent stance regarding continued “downside” risks to the economy and capital markets. In European news, Spain has not yet requested assistance from the ECB and has resisted being placed under international supervision. However, Reuters reported that both German and European Union officials are urgently searching for solutions to their onerous debt problems. Stocks sold off in the final hour after the U.S. Fed boosted capital requirements for several of the country’s largest banks. Stocks rallied on Friday as enthusiasm regarding the global economy improved.
Stocks End Flat After Support Was Defended It was another volatile week on Wall Street as investors digested a slew of economic and earnings data. Apple was the big standout winner last week as the stock shot up to new highs after reporting earnings and legendary investor Warren Buffet announced he was increasing his position…
STOCK MARKET COMMENTARY: FRIDAY, JULY 19, 2013 The major averages rallied for a fourth straight week helping nearly all the popular indices hit new all-time highs. Meanwhile, the tech-heavy Nasdaq hit a 13-year high. The strong bull market that we are experiencing continues to be driven by easy money policies from global central banks. After…
Wednesday, July 7, 2010 Market Commentary: Stocks scored a follow-through day (FTD) on the fourth day of their latest rally attempt as volume, a critical component of institutional sponsorship, topped Tuesday’s levels. Advancers trumped decliners by over a 5-to-1 ratio on the NYSE and over a 3-to-1 ratio on the Nasdaq exchange. However, there were only 7 high-ranked…
The benchmark S&P 500 Index currently has 5 distribution days while the Nasdaq Composite and Dow Jones Industrial Average have 4 since the March 1, 2010 follow-though-day (FTD). These distribution days have not been damaging, however the simple fact that we currently have 5 distribution days for the S&P 500 suggests a more cautious approach may be prudent. Trade accordingly.
Please Note: Today is our last daily note. Starting Tomorrow- May 1, 2012, it will become a weekly note, with intra-week updates, if needed. We would like to thank you for your continued support and patronage! Monday, April 30, 2012 Stock Market Commentary: Stocks and a slew of other “risk assets” slid on Monday after Spain…
Friday, December 9, 2011 Stock Market Commentary: For the week, risk assets were mixed as investors digested a slew of data and headlines from across the globe. From our point of view, the market confirmed its latest rally attempt on Wednesday, November 30, 2011 when all the major averages soared over +4% on monstrous volume in response…
