Wednesday, April 28, 2010
Stock Market Commentary:

The major averages ended higher after the Federal Reserve held rates steady near historic lows and Spain’s debt was downgraded. Volume totals on Wednesday were reported lower compared to Tuesday’s totals which suggested large institutions were not aggressively buying stocks. Advancers led decliners by a 11-to-8 ratio on the NYSE and by a 14-to-13 ratio on both major exchanges. Meanwhile, new 52-week highs easily trumped new 52-week lows. There were 15 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, considerably lower than the 28 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally.

Next Domino To Fall: Spains’ Debt is Downgraded!

The euro slid to a fresh one year low after Spain’s debt rating was downgraded. This has been a tough week for the EU, Greece, Spain and Portugal all saw their debt ratings cut as the fear of default swells. Analysts are concerned that other European nations, (i.e. Ireland and Italy), may be next to see their ratings cut as the continent continues to make its way through the worst financial crisis since WWII!

The Fed Holds Rates Steady… Anyone Surprised!

Around 2pm EST, the Federal Reserve held rates steady and reiterated its stance to keep its benchmark interest rate near zero for an “extended period” as the economy continues to improve. The Fed said, “Economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” Futures currently show that there is a 15% chance that the Fed will raise rates by their August meeting. In March, the odds were closer to 50%. 

Market Action- Confirmed Rally:

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. Tuesday marked the latest distribution day since the rally was confirmed on the March 1, 2010 follow-through day (FTD). According to the paper, there are 7 distribution days for the NYSE, 6 for the S&P 500, 5 for the Dow, and 3 for the Nasdaq. This puts some pressure on this 9-week rally, but has yet to cause any technical damage.
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