Daily Market Commentary

Stocks Rally On A Busy Monday

28 Dec

Monday, December 28, 2009

Market Commentary:

Stocks rallied around the world as the US dollar fell after stronger than expected economic data was announced from China and Japan. Volume, an important indicator of institutional sponsorship, was lighter than Wednesday’s levels, again revealing the lack of appetite for accumulating shares from very large and influential institutional investors. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by nearly a 2-to-1 ratio on the Nasdaq exchange. There were 62 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, one less than the total of 63 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.

Strong Economic Data From China & Japan:

Overnight, a stronger-than-expected report was released from China which showed that fourth quarter GDP would top 10% and its full year economic growth would reach +8.3%, which also topped views. China, one of the fastest growing economies in the world, has enjoyed robust growth for much of this decade thanks to a favorable labor market, a pegged currency, and its strong competitive advantages. The China Construction Bank (CCB) released the report and cited rising exports and increased domestic consumption as the two primary sources for the stronger than expected forecast. The Japanese government released a stronger-than-expected economic report which showed that industrial output rose +2.6% last month. November’s reading was the the ninth consecutive monthly gain and beat the Street’s estimate for a +2.4% increase.

Bank of Israel Raises Rates:


Elsewhere, the Bank of Israel raised its benchmark interest rate for a third time since the global economy began to recover earlier this year. The Israeli central bank said that economic growth has accelerated sharply in recent quarters which, in turn, has caused inflation to exceed the government’s target range. In case you did not know, currently, the Israeli central bank is one of the most hawkish central banks in the world as they continue to raise rates even in the face of a potential double dip recession.

Holiday Shopping Estimates Up +3.6%:

Preliminary results show that US retail sales rose +3.6% this holiday season when compared to the 2008 holiday shopping season. One extra shopping day coupled with a last minute surge in purchases the week before Christmas helped produce the stronger than expected results. MasterCard Advisors’ SpendingPulse released the findings and are usually considered a good proxy of consumer spending. It is important to note that according to the National Retail Federation, the 2008 season was the worst in four decades. Many economists believe that the US economy, the world’s largest, will grow by +3.5% in 2010 thanks to a weak dollar and a rebounding jobs market. If that were to occur, that would be the best performance since 2004 as spending increases and companies increase investments.

Market Action: Price and Volume

Looking at the market, the action remains healthy. The Dow Jones Industrial Average, small cap Russell 2000 index, S&P 500 and Nasdaq composite are all trading near fresh 2009 highs. Leaving the NYSE composite just below its 2009 high. The fact that the market managed to rally last week and hit new highs in the face of disconcerting economic data and a stronger dollar is a very healthy sign. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing.

Elsewhere, the Bank of Israel raised its benchmark interest rate for a third time since the global economy began to recover earlier this year. The central bank said that economic growth has accelerated sharply in recent quarters which has caused inflation to exceed the government’s target range. The Israeli central bank is one of the most hawkish central banks in the world at this point as they have raised rates in the face of a potential double dip recession.
Holiday Shopping Estimates +3.6%:
Preliminary results show that US retail sales rose +3.6% this holiday season when compared to the 2008 holiday shopping season. A last minute surge in purchases the week before Christmas helped produce the stronger than expected results. MasterCard Advisors’ SpendingPulse released the findings and is usually a reliable indicator for this data. It is important to note that according to the National Retail Federation, the 2008 season was the worst in four decades. Many economists believe that the US economy, the world’s largest, will grow by +3.5% in 2010 thanks to a weak dollar and a rebounding jobs market. If that were to occur, that would be the best performance since 2004 as spending increases and companies increase investments.
Price and Volume:
Looking at the market, the action remains healthy. The Dow Jones Industrial Average, small cap Russell 2000 index, S&P 500 and Nasdaq composite are all trading near fresh 2009 highs. Leaving the NYSE composite just below its 2009 high. The fact that the market managed to rally last week and hit new highs in the face of disconcerting economic data and a stronger dollar is a very strong sign. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing.
PICTURED: The S
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Newer Stocks End Lower On Housing & Consumer Sentiment Data
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21 Sep
Daily Market Commentary

Stocks Smacked After Fed Decision

Wednesday, September 21, 2011
Stock Market Commentary:

Stocks digested a slew of headlines from across the globe on Wednesday as the Fed concluded their much anticipated two-day meeting. The major averages continued trading between support and resistance of their current base but most European markets are still near their 2011 lows. 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.

ECB Relaxes Rules, Existing Home Sales Jump, Banks Credit Rating Cut, & Fed Decision Slams Stocks

On Wednesday, the ECB relaxed rules for eligibility requirements on debt instruments to be used by financial institutions as collateral for borrowing from the bank. Under the old rules, CNBC.com reported that “debt instruments issued by credit institutions – except covered bonds – were only eligible if they were admitted for trading on regulated markets. This requirement has now been abolished, according to a release from the ECB.”
In the U.S., the National Association of Realtors said existing home sales jumped +7.7% month over month to an annual rate of 5.03 million units. The median home price slid by -5.1% from the same period last year. Elsewhere, Moody’s cut the credit rating for Citigroup (C), Bank of America (BAC), & Wells Fargo (WFC) as concern spread that the government would not be in a position to help these banks if they needed it. At 2:23pm EST, the Federal Reserve concluded their latest meeting, held rates steady, and announced their “twist” program. The Fed will be $400 billion by June 2012 in an effort to make credit less expensive and stimulate spending and investment. In an effort to keep mortgage rates low, the Fed also said it would reinvest the proceeds from maturing agency debt and mortgage-backed securities into mortgage-related debt. The Fed also said downside economic pressure remains a concern.

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.
 
 

16 Aug
Daily Market Commentary

All Eyes On Europe

Tuesday, August 16, 2011
Stock Market Commentary:

Stocks opened lower as the world awaited the conclusion of the much anticipated meeting between France and Germany. In the U.S., the window remains open for a new FTD to emerge which will confirm the current rally attempt. Technically, as long as last Tuesday’s (8.16.11) lows hold- there is a strong chance that the markets may be forming a short-term low. However, there is no rush to buy ahead of a FTD because doing so increases the odds of failure. To be clear, the bears remain in control of this market until the major averages close above their longer term 200 DMA lines or a new FTD emerges. A new follow-through day will emerge when at least one of the major averages rallies at least +1.8% on higher volume than the prior session. Until that happens, this is just a normal “oversold” bounce.

EU Debt Woes Ease & Housing Starts Fall Less Than Expected:

The Commerce Department reported that housing starts slid -1.5% to a seasonally adjusted annual rate of 604,000 units. The report topped estimates for 600,000 but did little to help the ailing housing market since June’s reading was revised down to a 613,000, from 629,000. Lower revisions typically bode poorly for the underlying investment. The one ray of light was that housing starts rose +9.8% from the same period last year.  A separate report showed U.S. industrial output rising +0.9% last month, more double June’s +0.4% and the fastest gain in 7 months. In Europe, France and Germany ruled out a new Euro Bond which was designed to help alleviate Europe’s onerous debt burdens but agreed to several other factors aimed at restoring confidence in the troubled continent. The latest GDP data out of Europe missed estimates.

Market Outlook- Market In A Correction

The latest action in the major averages suggests the market is back in a correction as all the major averages remain below key technical levels. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests caution is paramount at this stage until all the major averages rally back towards their respective 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
 

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17 Jun
Daily Market Commentary

Stocks Edge Higher After Retesting 200 DMA Line

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.

Investors Digest A Slew of Economic Data: Jobless Claims, CPI, & Leading Indicators:

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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31 Dec
Daily Market Commentary

Stocks Surge In 2009 But Down For the Decade!

We would like to wish all our loyal clients & readers a very Happy & Healthy 2010!

The major averages ended lower on the last trading day of the year. Volume, an important indicator of institutional sponsorship, was reported lighter than Tuesday’s totals which indicated large institutions were not aggressively buying or selling stocks. Decliners led advancers by a x-to-x ratio on the NYSE and by a x-to-x ratio on the Nasdaq exchange. There were XX high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, XXXXXXX than the total of 18 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.
At 8:30 AM EST, the Labor Department said initial jobless claims fell -28,000 to 452,000 in the week ending December 19. The report topped the Street’s 460,000 estimate and supports the notion that the ailing jobs market is improving. Continuing claims fell 127,000 in the December 12 week to 5.076 million. 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 a deteriorating labor market. 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.
For the year, the small cap Russell 2000 index led its peers, surging a whopping XX.XX%. The tech heavy Nasdaq composite was a close second, rallying XX.XX%. Meanwhile, the benchmark S&P 500 and Dow Jones Industrial Average both rose XX.XX% this year. Since the March lows, the Russell 2000 vaulted +85% while the Nasdaq composite surged a whopping +81%. The S&P 500 and Dow rose +70% and 64%, respectively. On a percentage basis, the past nine months have been one of the strongest in history which bodes well for the bulls.
Looking at the market, the action remains constructive. The Dow Jones Industrial Average, small cap Russell 2000 Index, S&P 500 Index and Nasdaq Composite and NYSE Composite indices are all trading just below their respective 2009 highs which bodes well for this rally. The inverse relationship with the US dollar has eased in recent weeks as both stocks and the greenback have rallied in tandem. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing.
Note: We would like to wish all our loyal clients & readers a very Happy & Healthy 2010!
PICTURED: The

Thursday, December 31, 2009

Market Commentary:

The major averages ended lower on the last trading day of the year. Volume, an important indicator of institutional sponsorship, was reported lighter than Wednesday’s totals which indicated large institutions were not aggressively selling stocks. Decliners led advancers by nearly a 2-to-1 ratio on the NYSE and by a 9-to-5 ratio on the Nasdaq exchange. There were 24 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 18 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.

Economic Data- Weekly Jobless Claims:

At 8:30 AM EST, the Labor Department said initial jobless claims fell -28,000 to 452,000 in the week ending December 19. The report topped the Street’s 460,000 estimate and supports the notion that the ailing jobs market is improving. Continuing claims fell 127,000 in the December 12 week to 5.076 million. 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 during the prior week. Remember, the report is counter intuitive because an increasing number means more people are filing for unemployment claims and suggests a deteriorating labor market. The converse is also true, lower readings are a sign of strength. Investors tend to look at the four-week moving average because it smoothes out weekly volatility.

Performance Data For The Decade & 2009:

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29 Dec
Daily Market Commentary

Stocks End Lower On Housing & Consumer Sentiment Data

Tuesday, December 29, 2009

Market Commentary:

The major averages traded between positive and negative territory before ending lower as investors digested the latest round of mixed economic data. Volume, an important indicator of institutional sponsorship, was lower than Monday’s session which indicated large institutions were not aggressively dumping stocks. Advancers were about even with decliners on the NYSE and Nasdaq exchange. There were 27 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 68 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.

Housing Data: The S&P/Case-Shiller® Home Price Index

At 9:00 AM EST, the S&P/Case-Shiller® home price index was released. The index is used as a proxy for the housing market and tracks monthly changes in the value of residential real estate in 20 metropolitan areas across the country. October’s reading came in at 146.58 vs.September’s 146.51, for a -7.3% year-on-year rate vs. a -9.4% decline in September. Housing stocks, sold off on the news which illustrates that the ailing housing market is still not out of the proverbial woods.
At 10:00 AM EST, the Conference Board released an upbeat report on consumer sentiment. The Conference Board’s consumer confidence index increased by 2.3 points to 52.9. The survey covers five thousand consumers across the country each month and is used as a proxy for consumer spending. Typically, stronger consumer confidence translates into stronger consumer spending but they are not directly correlated each month.
Looking at the market, the action remains constructive. The Dow Jones Industrial Average, small cap Russell 2000 index, S&P 500 and Nasdaq and NYSE composite are all trading near fresh 2009 highs. The inverse relationship with the US dollar has eased in recent weeks as both stocks and the greenback have rallied in tandem. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing

At 9:00 AM EST, the S&P/Case-Shiller® home price index was released. The index is used as a proxy for the housing market and tracks monthly changes in the value of residential real estate in 20 metropolitan areas across the country. October’s reading came in at 146.58 vs.September’s 146.51, for a -7.3% year-on-year rate vs. a -9.4% decline in September. Housing stocks, sold off on the news which illustrates that the ailing housing market is still not out of the proverbial woods.

Consumer Confidence: The Conference Board’s consumer confidence index

At 10:00 AM EST, the Conference Board released an upbeat report on consumer sentiment. The Conference Board’s consumer confidence index increased by 2.3 points to 52.9. The survey covers five thousand consumers across the country each month and is used as a proxy for consumer spending. Typically, stronger consumer confidence translates into stronger consumer spending but they are not directly correlated each month.

Market Action: Objective Analysis of Price & Volume

Looking at the market, the action remains constructive. The Dow Jones Industrial Average, small cap Russell 2000 index, S&P 500 and Nasdaq and NYSE composite are all trading near fresh 2009 highs. The inverse relationship with the US dollar has eased in recent weeks as both stocks and the greenback have rallied in tandem. Ideally, one would like to see leadership and volume expand over the next few weeks as the major averages continue advancing.

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