Stocks Edge Higher As EU Debt Woes Continue
Monday, September 12, 2011
Stock Market Commentary:
Stocks edged higher snapping a 3-day losing streak as fear spread that Greece may default on their debt. The major averages continued trading between support and resistance of their current base but most European markets, fell to fresh 2011 lows (which bodes poorly for US stocks). At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.
Germany Prepares For A Greek Default & Obama Pushes Jobs Plan:
Over the weekend, Greek Prime Minister George Papandreou, approved new measures that are designed to help the debt-stricken nation avoid a default and stay with the Euro. On Monday, several well-known European markets tanked to fresh 2011 lows as rumors spread that Germany, Europe’s largest economy, was preparing for a Greek debt default. In the U.S., President Obama gave a speech to urge Congress to pass his jobs plan.
Market Outlook- Rally Under Pressure:
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
