Stocks Pullback To Digest Tuesday's Strong Move

Byinfo@50park.com
INDU- Fighting To Stay Above 50 DMA Line
INDU- Fighting To Stay Above 50 DMA Line

Wednesday, April 18, 2012
Stock Market Commentary:

Stocks and other risk assets were mostly lower on Wednesday as investors digested Tuesday’s strong move and the latest round of mixed earnings data. As earnings continue to be released in droves, it is paramount that we not only pay attention to the actual numbers but how the stocks (and major averages) react to the numbers.  This allows us to see how the market participants are “voting” and helps us filter out the noise and focus on what matters most: price action. The Nasdaq composite, Dow Jones Industrial Average, and the benchmark S&P 500 index are all back above their respective 50 DMA lines which bodes well for the bulls. The small-cap Russell 2000 index is still below that closely followed level.

Spanish Debt Woes and Earnings Hurt Stocks:

Stocks fell on Wednesday as fresh concerns spread about Spain’s onerous debt levels. In other European news, minutes from the Bank of England showed that only one Monetary Policy Committee member still supported quantitative easing which squashed hopes of anther round of QE. ECB policymaker Jens Weidmann told Reuters that Spain should take care of its own debt woes and ruled out a third long-term financing operation (LTRO) from the ECB. In a surprise OP-ED, Portugal’s prime minister wrote in the Financial Times that the country may not return to capital markets for funds in 2013, as previously expected. Earnings disappointments from IBM and Intel (INTC) also weighed on stocks.

Market Outlook- In A Correction

From our point of view, the market is getting stronger now that several of the major averages are fighting to get back above their respective 50 DMA lines. Looking forward, that level should now become support. Therefore, probing the long side with close protective stops (below the 50 DMA line) might be prudent if you are looking for a low risk entry point. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!
 

Please Note:
After nearly 10 years of writing daily market reports we are Due to time constraints, this commentary will become a weekly note starting May 1, 2012.  
We would like to thank you for your continued support and patronage!

Similar Posts

  • Stocks End Mixed

    Byinfo@50park.com

    Market Action- Rally Under Pressure; Week 26
    It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines recently which is a healthy sign. From our point of view, the market remains in rally-mode until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.
    Are You Looking For Someone To Manage Your Money?
    Our Private Wealth Management Services Can Help You!

  • Home Prices Fall But Consumer Confidence Tops Estimates

    Byinfo@50park.com

    Tuesday, December 27, 2011 Stock Market Commentary: Stocks opened the shortened holiday week higher after the latest round of U.S. consumer sentiment topped estimates. From our point of view, Monday marked Day 5 of the current rally attempt which means the window is now open for a new follow-through day to emerge [as long as…

  • Day 1 Of A New Rally Attempt

    Byinfo@50park.com

    Looking at the market, Monday marked Day 1 of a new rally attempt which means that as long as Monday’s lows are not breached, the earliest a possible follow-through day could emerge will be this Thursday. However, if Monday’s lows are taken out, then the day count will be reset and the chances for a steeper correction increase markedly. It is also important to see how the major averages react to their respective 50 DMA lines. Until they all close above that important level then there will be a lot of technical damage on the chart. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is key.

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

    Byinfo@50park.com

    Looking at the market, the major averages continue to trade near their respective 50 DMA lines as they consolidate their recent move. Remember that as long as February 5th lows are not breached the window remains open for a new follow-through day (FTD) to emerge. A new follow-through day will confirm the current rally attempt and will be produced when one of the major averages rallies at least +1.7% on higher volume than the prior session as a new batch of leaders breakout of sound bases. However, if the February 5, 2010 lows are breached then the day count will be reset and a steeper correction may unfold.

  • Stocks Rally As Dollar Falls

    Byinfo@50park.com

    Monday, October 18, 2010 Stock Market Commentary: Stocks rallied as the US dollar fell and the latest round of economic and earnings data hit the wires.  Volume patterns remain healthy as the major averages continue their 8-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks.  …