Daily Market Commentary

Stocks Surge In 2009 But Down For the Decade!

31 Dec

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:

2000’s Performance Data:

The 2000’s will go down in history as a blasé decade for the stock market. Over the past 10 years, the major averages are actually down which is a historical anomaly. During that period, the tech heavy Nasdaq composite is the standout loser shedding a whopping -44% while the benchmark S&P 500 lost -24% and the Dow Industrials gave up -9%.

Multi Decade Consolidation:

Over the past 100 years, there have been multiple times when the stock market spent nearly two decades moving sideways before a new massive multi decade bull market was born. The first 10-year consolidation occurred between 1906-1916 and was followed by the roaring 20’s and then the Great Depression. The next notable consolidation occurred between 1966-1982 (16 years) before the massive bull market of the 1980s and 1990s was born. Are we in the middle of one of those protracted consolidations? Yes, but fortunately, our investment outlook allows us to prosper from the shorter term cyclical bull and bear markets that occur during the broader consolidation. Our investment thesis is simple: we remain flexible in our approach and constantly listen to the market by objectively analyzing price and volume.
Emerging markets enjoyed hefty gains over the last decade. Brasil’s stock market surged a whopping +301% while China’s soared +72%. Other emerging markets also enjoyed huge moves during the past 10 years as capital continues to flow into these younger and more vibrant economies.

2009 Performance:

For the year, tech-heavy Nasdaq composite led its peers, surging a whopping +45%. The small cap Russell 2000 index jumped +25%, while the benchmark S&P 500 and Dow Jones Industrial Average rose +24% and +19% respectively. Since the March lows, the Russell 2000 vaulted +85% while the Nasdaq composite surged a whopping +81%. The S&P 500 and Dow Industrials 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.

Market Action: Price & Volume

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.

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Newer Sarhan Capital- A Decade In Review (2000-2009)
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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.
 
 

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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.

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Market Outlook- Market In A Correction

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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.

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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.

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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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