Daily Market Commentary

Strong Start To Q2

Thursday, April 1, 2010 Market Commentary:

Stocks rallied on this shortened holiday week as investors digested the latest round of healthy economic data and Q1 came to close. Volume totals on the NYSE and on the Nasdaq exchange were reported lighter compared to Wednesday’s session. Breadth was positive, advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by a 14-to-13 ratio on the Nasdaq exchange. New 52-week highs trumped new lows on both exchanges yet again. Meanwhile, there were 43 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 16 issues that appeared on the prior session.

Monday & Tuesday’s Headlines:

Stocks rallied on Monday as the US dollar fell after the government said consumer spending rose in February for a fifth cosecutive month while personal income levels held steady. On Tuesday, stocks closed with modest gains after trading between positive and negative as investors digested a slew of economic data. Housing stocks sold off after the S&P/Case-Shiller index of home prices was released. The 20-city home-price index unexpectedly rose +0.3% in January. The closely watched index tracks monthly changes of home prices in 20 metropolitan regions across the country and is used as a good proxy for the underlying health of the residential real estate market. Elsewhere, the Conference Board released its consumer sentiment index which rose to +52.5 in March, up from +46.4 in February.

Wednesday & Thursday’s Action:

Before Wednesday’s opening bell, ADP, the country’s largest private payrolls company, said US employers slashed -23,000 jobs in March which fell short of the Street’s +40,000 estimate. Elsewhere, the Chicago PMIindex grew to 58.8 but fell short of the Street’s more robust 61 forecast. A separate report showed that factory orders grew +0.6% as the economy continues to improve. Wednesday also marked the end of the first quarter. Stocks jumped on Thursday after the Labor Department said weekly jobless claims fell to the lowest level since 2008 which bodes well for Friday’s much anticpated nonfarm payrolls report. Many global markets are closed for holidays, the government will report March payrolls. The median of economists’ forecasts in a Bloomberg survey is for an increase of 184,000, the biggest in three years.
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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