Stocks Soar As Dollar Plunges
Tuesday, October 5, 2010
Stock Market Commentary:
Stocks soared on Tuesday as the US dollar plunged and central banks in Japan and Australia surprised the Street with their decisions on interest rates. Volume totals were reported higher on the NYSE and on the Nasdaq exchange compared to Monday’s session which signaled that large institutions were aggressively accumulating stocks. Advancers trumped decliners by over a 4-to-1 ratio on the NYSE and on the Nasdaq exchange, while new 52-week highs easily outnumbered new 52-week lows on both exchanges. There were 86 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, up nicely from the 19 issues that appeared on the prior session.
Japan & Australia’s Central Banks Surprise Wall Street:
Overnight, the US dollar plunged after the Bank of Japan cut rates to zero, announced another round of asset purchases, and Australia’s central bank held rates steady. Both banks caught analysts off guard which sent stocks and a slew of commodities soaring in overnight trade. Stocks extended their rally after the ISM’s service index rebounded and topped estimates. The faster-than-expected report bodes well for the global recovery.
Market Action: Confirmed Rally:
The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.
