Wednesday, September 7, 2011
Stock Market Commentary:
European stocks snapped a 4-day losing streak and U.S. stocks snapped a 3-day losing streak on Wednesday after a German court ruling in favor of the country’s participation in the Greek bailout. 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.
Germany Backs Greek Bailout & Fed Beige Book Released:
Investors breathed a collective sigh of relief after a German court approved their country’s participation in the Greek bailout. Billionaire investor George Soros said the current crisis is “worse than Lehman.” His former partner, another legendary investor, Jim Rogers, said the Swiss Bank’s move on Tuesday was a “huge mistake.” At 2pm, the Fed’s Beige Book was released which showed a continued slowdown across much of the nation.
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.