Markets Fall As Dollar Rallies

Byinfo@50park.com

Wednesday, May 11, 2011
Stock Market Commentary:

Stocks and a host of commodities fell as the bears showed up after a three day hiatus and sent a slew of global markets lower in heavy trade. Oil, silver, gold, and a host of other closely followed commodities fell after a brief rebound from last week’s week-long “Flash Crash.” From our vantage point, the market rally remains under pressure due to the lackluster action in the major averages and several leading stocks.

Inflation Rises Overseas While Trade Deficit Widens In U.S.

On Wednesday, China said consumer prices jumped +5.3% in April (from the same period in 2010) and lending exceeded analysts’ estimates. The news will likely prompt China’s central bank to raise rates (i.e. tighten monetary policy) to curb inflation and cool their red-hot economy. Inflation in Germany, Europe’s largest economy, also topped estimates and rose by +2.7%. Global markets fell as fear spread that Chinese demand will slow.
In other news, the U.S. trade deficit widened more than forecast in March due to surging commodity prices which eclipsed record exports.  The Commerce Department said the trade deficit rose +6% to $48.2 billion, the largest since June 2010, from $45.4 billion in February. 

Market Outlook- Rally Under Pressure

From our point of view, the market rally is under pressure which suggests caution is paramount at this stage.  Looking forward, the next level of support for the major averages are their respective 50 DMA lines and resistance is their 2011 highs. The rally remains in tact as long as support holds. If you are looking for specific help navigating this market, please contact us for more information.

Want Better Results?

You Need Better Ideas!

We Know Markets!

Learn How We Can Help You!

Similar Posts

  • Stocks Get Smacked on A Busy Wednesday

    Byinfo@50park.com

    For the most part, the major averages and leading stocks are pausing to digest their recent gains as investors make their way through the latest round of economic and earnings data. Until a clear picture can be formed as to how companies fared last quarter, one could easily expect to see more of this sideways action to continue. The market just began its 46th week since the March lows and the rally remains intact as long as the major averages continue trading above their respective 50-day moving average (DMA) lines. Trade accordingly.

  • Stocks Plunge Below 200 DMA line On Heavy Volume

    Byinfo@50park.com

    At this point, all the major averages sliced and closed below their respective 200 DMA lines which suggests lower prices will likely follow. Furthermore, the NYSE composite undercut its Thursday, May 6, 2010 low (Flash crash) which bodes poorly for this market. In addition, all the major averages are now down over -10% from their late April highs which is the first time that occurred since the March 2009 low. On Wednesday, all the major averages undercut their recent lows which means the day count was reset and we are now looking for Day 1 of a new rally attempt to occur. 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.

  • Stocks Tank on EU Downgrades & Goldman Testimony

    Byinfo@50park.com

    Tuesday, April 27, 2010 Market Commentary 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 2 for the Nasdaq. This puts subtle pressure on this 9-week rally.

  • Stocks Tank As Correction Take Hold

    Byinfo@50park.com

    The market is currently in a correction which, according to historical precedent, suggests 3 out of 4 stocks will follow the market lower until a new follow-through day emerges. That said, taking the appropriate action on a case-by-case basis with your stocks prompts investors to raise cash when any holdings start getting in trouble. It is also important to note that the major averages have experienced multiple “corrections” since the March 2009 lows and each one has been mild at best (less than a -10% decline from the recent high). Therefore, it will be very interesting to see how low this correction goes before the bulls show up and defend support. Additionally, it is important to note that the market can go much lower (or higher) than anyone thinks; so it is of the utmost importance to filter out the “noise” and carefully analyze price and volume action of the major average for the best read on the health of the market.

  • Stocks Fall As Investors Digest A Slew Of Economic Data

    Byinfo@50park.com

    Stocks closed lower as investors digested a slew of economic data. Volume, a critical component of institutional demand, was mixed compared to Monday’s levels; higher on the Nasdaq and lower on the NYSE. The higher volume on the Nasdaq marked a distribution day for that exchange but the lower volume on the NYSE helped those indexes avoided that fate. Decliners led advancers by over a 21-to-17 ratio on the NYSE and by over a 16-to-11 ratio on the Nasdaq exchange. There were 12 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher from the 41 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.