Wednesday, March 30, 2011
Stock Market Commentary:
Stocks rallied on Wednesday after healthy news from the ailing jobs market was released and Portugal’s bond auction went well. It was encouraging to see a slew of leading stocks and the benchmark S&P 500, Dow Jones Industrial Average, Nasdaq composite, and small cap Russell 2000 index all close above their respective 50 DMA lines last week. The 28-week rally, which began on the September 1, 2010 follow-through day (FTD), ended on Thursday March 10, 2011 when all the major U.S. averages plunged below their respective 50 DMA lines in heavy trade. However, the correction was short lived when a new rally was confirmed on Thursday March 24, 2011′s healthy action. The healthy action suggests the bulls are back in control. Interestingly, it took IBD 4 days before recognizing that important fact. We have received a lot of positive feedback about our calls in recent weeks and months, and are happy to be able to help!
ADP Jobs Report & Portugal’s Bond Auction:
Before Wednesday’s open, ADP, the country’s largest private payrolls company, said U.S. employers added 201,000 jobs in March. The report was just shy of the Street’s 205k estimate but bodes well for Friday’s official non farm payrolls report. Elsewhere, Portugal’s five-year bond yield jumped above +9% for the first time since the euro’s inception in 1999! Keep in mind, that the first quarter will end on Thursday and a lot of last minute “window dressing” is likely occurring.
Market Action-Confirmed Uptrend
From our point of view, the market is back in a confirmed uptrend after a modest (and healthy) -6% correction from its post-recovery highs. The fact that the Dow Jones Industrial Average, small-cap Russell 2000 index, and Copper all closed above their respective 50 DMA lines on Wednesday March, 23 was a very healthy sign and suggests higher prices will follow. The very next day, the benchmark S&P 500 regained that important level and broke above its downward trendline (shown above). Couple that with the fact that other markets like Oil, Silver, and Gold are all at fresh post recovery highs suggests it is only a matter of time until equities follow. The final bullish sign for us was that a slew of high ranked stocks triggered fresh technical buy signals this week which suggests higher, not lower prices lie ahead. If you are looking for specific help navigating this market, please contact us for more information.