Monday, April 5, 2010
Market Commentary:

The major averages opened higher after the latest round of stronger than expected economic data was released. Monday was the first trading day after March’s nonfarm payrolls report was released. Stocks rallied around the world after the Labor Department reported the strongest monthly reading in payrolls since Q1 2007. The US dollar fell which also helped stocks and commodities rally. Crude oil broke out of a multi month base and hit a fresh 18 month high on signs the economy is improving.

Healthy Economic Data: ISM Service Index & Pending Home Sales:

Elsewhere, the ISM released its service index which topped analysts’s estimates. Separately, pending home sales unexpectedly rose which bodes well for the ailing housing market. The healthly housing data helped a slew of housing stocks rally as investors believe the “worst is now over.”

Market Action: Confirmed Rally:

The benchmark S&P 500 Index currently has 4 distribution days while the Nasdaq Composite and Dow Jones Industrial Average have 3 since the March 1, 2010 follow-though-day (FTD). These distribution days have not been damaging, and normally it is considered healthy for the major averages to have less than 4 distribution days in a four week period. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to proactively be buying high quality breakouts meeting the investment system guidelines. Trade accordingly.
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