Daily Market Commentary

Stocks Jump As China Eases Debt Woes

27 May

Thursday, May 27, 2010
Stock Market Commentary:

Stocks surged around the world after China said it remains a long-term investor in Europe which helped the euro snap a losing streak and China’s stock market to score a follow-through day (FTD). Volume totals were reported lower compared to Wednesday’s totals on both major exchanges while the indices ended unanimously higher.  Meanwhile advancers trumped decliners by over an 8-to-1 ratio on the NYSE and over an 6-to-1 ratio on the Nasdaq exchange. There were 9 high-ranked companies from the CANSLIM.netLeaders List that made a new 52-week high and appeared on the CANSLIM.netBreakOuts Page, higher than the 8 issues that appeared on Tuesday. New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.  It is difficult for the market to mount a sustained rally without a healthy crop of strong leaders.

China Eases Debt Woes & Scores a FTD:

Overnight, China’s foreign exchange regulator quelled rumors that China was going to review its euro holdings. He said the rumors were “groundless” which sparked a world-wide rally and helped allay ongoing contagion woes. In Spain, Jose Luis Rodriguez Zapatero, won parliamentary approval for austerity measures which was another healthy step for the euro. One of the three stock exchanges in China, the Shenzhen stock exchange, scored a follow-through day on Thursday which bodes well for global capital markets. Over the past few years, China’s stock market has moved “ahead” of other stock markets.  For example, China’s Shanghai composite hit a low in October 2008, five months before the March 2009 bottom. More recently, the Shanghai composite placed a near term top on April 15, ten days before the S&P 500 printed its 2010 high of 1,219. Despite, China’s strong move it is still -20% below its 2010 high which technically defines a bear market. In addition, the Shanghai composite is still below both its 50 and 200 DMA lines which suggests a lot of technical damage most be repaired before this market can hit new highs.

US Economic Data: GDP & Jobless Claims:

In the US, two important economic reports were released: gross domestic product (GDP) and weekly jobless claims. The government said the US economy grew at a slower pace than previously expected in the first quarter and jobless claims fell less than economists expected. First quarter GDP rose +3% compared to last month’s reading of a +3.2% increase. Meanwhile, the Labor Department said, initial jobless claims fell by -14,000 to 460,000 in the week ended May 22 which was lower than the Street’s forecast of 455,000.

Market Action- In A Correction:

Thursday marked Day 3 of a new rally attempt for the benchmark S&P 500 Index and Day 1 for the other major averages. That said, as long Tuesday’s lows are not breached in the S&P 500, the earliest a proper follow-through day (FTD) could occur would be Friday. However, if at anytime Tuesday’s S&P 500 Index lows are breached, then the day count will be reset. What does all of this mean for investors? Simple, the market remains in a correction which reiterates the importance of adopting a strong defense stance until a new rally is confirmed. Trade accordingly.
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Thursday, June 17, 2010
Stock Market Commentary:

The major averages ended slightly higher as investors digested a slew of economic data and BP’s (BP) CEO spent the day testifying on Capital Hill. Volume totals were reported lower on both major exchanges, which signaled that large institutions were not aggressively selling stocks. Advancers were about even with decliners on the NYSE and on the Nasdaq exchange as the major averages continued consolidating Tuesday’s large move. There were 22 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 35 issues that appeared on the prior session.  New 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

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Before Thursday’s opening bell, the Labor Department said US jobless claims rose to 472,000 last week and the consumer price index slid which helped allay inflation woes. After the bell, the Federal Reserve Bank of Philadelphia’s general economic index fell to a 10-month low of 8, less than half the median estimate of Wall Street economists. The Conference Board’s index of leading indicators in April edged down -0.1%, following a +1.3% increase in the prior month.

Stock Market Action- Confirmed Rally:

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18 Mar
Daily Market Commentary

Investors Digest A Slew Of Economic Data

Thursday, March 18, 2010
Market Commentary:

The major averages traded between positive and negative territory for most of the day after the dollar rose and investors digested a slew of economic data. Volume totals were reported lower on the Nasdaq exchange and on the NYSE compared to the prior session. Decliners led advancers by more than a 22-to-15 ratio on the NYSE and by a 5-to-4 ratio on the Nasdaq exchange. There were 46 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 77 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges.

Fed: To Raise, or Not To Raise, That Is The Question:

The dollar rallied after speculation increased that the Federal Reserve will raise its discount rate in the near future. The discount rate is the rate the Fed uses to charge banks for direct loans and was last raised after the market closed on Feb. 18, 2010. The Fed raised its discount rate by a quarter percentage point to +0.75% and said the move would encourage banks to rely more on money markets for short-term liquidity needs which would help stimulate the financial system.

Investors Digest A Slew of Economic Data:

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18 Feb
Daily Market Commentary

Day 9: Investors Digest A Slew of Economic & Earnings News

Thursday, February 18, 2010
Market Commentary:

Investors digested a slew of economic and earnings news on the 9th day of the current rally attempt. The earnings and economic news of the day sent mixed economic signals. Retail giant Wal-Mart (WMT) gapped down and sliced below its 50 DMA line after reporting tepid Q4 results. Earnings rose +9% while sales rose +1% vs. the same period in the prior year. While this was a strong improvement from the first three quarters of 2009, analysts were expecting better results. Barring some unforeseen event, the average company in the benchmark S&P 500 grew its earnings close to +70% last quarter which snapped a record nine quarter losing streak.
Fed Unexpectedly Raises Rates From +0.50% to +0.75%:

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14 Jan
Daily Market Commentary

Stocks Rally On Disconcerting Economic Data

Thursday, January, 14, 2010
Market Commentary:

Stocks edged higher after weaker than expected economic data was released. Volume was reported slightly higher than the prior session’s totals on the NYSE and about even on the Nasdaq exchange, which suggested large institutions were buying stocks. Advancers led decliners by nearly a 11-to-8 ratio on the NYSE and by a 16-to-11 ratio on the Nasdaq exchange. There were 28 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the total of 20 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
ECB, Jobless Claims & Retail Sales:

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07 Jan
Daily Market Commentary

Nasdaq Retreats; Other Major Averages Advance

Thursday, January 7, 2010
Market Commentary:

The major averages ended mixed after positive retail sales and weekly jobless claims were released. Volume, an important indicator of institutional sponsorship, was reported about even to slightly higher than Wednesday’s totals which indicated large institutions were accumulating, not distributing, stocks. Advancers led decliners on both major exchanges which was a positive sign. There were 32 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 total of 57 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows were again near the single digits.

Jobless Claims:

At 8:30AM EST, the Labor Department said new claims for unemployment benefits rose less than forecast to +434,000 in the week of January 2, 2010. Every Thursday, the Labor Department releases the report which compiles data showing the number of individuals who filed for unemployment insurance for the first time. Remember, the report is counter intuitive because an increasing number means more people are filing for unemployment claims and suggests the labor market is waning. The converse is also true, lower readings is a sign of strength. Investors tend to look at the four-week moving average because it smoothes out weekly volatility. Investors are now focused on December’s employment report which is slated to be released before Friday’s opening bell. Analysts believe that last month’s reading will be unchanged which bodes well for the ailing jobs market. So far, since the recession began, US employers slashed over 7 million jobs as the unemployment rate hit a two decade high of 10.2% in the fourth quarter.

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