Stocks End The Day, Week, Month & Year In The Red

Friday, January 29, 2010
Market Commentary:

Stocks ended the day, week, month and year lower as investors digested the latest round of tepid economic and earnings data. Volume totals have turned bearish in recent weeks as large institutions continue dumping stocks. Decliners continue to lead advancers as the correction intensifies.
Timing The Correction:
On Friday, January 22, US stocks ended their 46 week rally and entered a correction when all the major averages plunged below their respective 50-day moving average (DMA) lines. Since the March 2009 low, none of the major averages fell more than-10% from their post recovery highs which reiterates how strong this market actually is. However, now that the market is in a correction and the Nasdaq is down just under -8% from its recent high; it will be very interesting to see if the bulls show up and quell the bearish pressure or the selling intensifies. It is important to note that even other developed markets overseas have performed rather well over the past 10 months. However, the Hang Seng Index, Hong Kong’s stock market, fell -10% from its recent high which could drag the rest of the world lower.
The latest round of corporate earnings continue to top analysts’ estimates but fail to impress Wall Street. In the last full week of January, more than 130 companies in the benchmark S&P 500 reported their Q4 results but stocks sold off. Barring some unforeseen event, earnings will have expanded nearly +70% and snapped a record nine-quarter earnings slump. Longstanding readers of this column know that in addition to analyzing the numbers we pay equal, if not more, attention to how the market reacts to the numbers. So far, the reaction has been lackluster at best.

Monday:

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Stocks Fall on Negative Economic & Earnings Data

Thursday, January 28, 2010
Market Commentary:

Stocks got smacked on Thursday as the dollar and shorter-term Treasuries rose after a series of negative economic data was released. Volume totals were higher on both exchanges compared to the prior session which suggested that large institutions were aggressively selling stocks. Decliners trumped advancers by well over a 2-to-1 ratio on the NYSE and on the Nasdaq exchange. There were 9 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 10 issues that appeared on the prior session. New 52-week highs still outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Obama’s State Of The Union & Bernanke Reconfirmed:

The major averages negatively reversed, effectively ended their latest rally attempt and reset the day count after a slew of weaker than expected economic and earnings data was released. Stocks reacted poorly to Obama’s first State of the Union address largely due to his plan to increase taxes on the upper class and his plan to end proprietary trading and hedge-fund investments at large banks. Some highlights from his speech were: “the worst of the storm has passed, we face a deficit of trust, and I’m not interested in punishing banks.”
Over the past ten days, investors were concerned that Congress would not reconfirm Federal Reserve Chairman Ben S. Bernanke for a second term. However, those concerns were allayed four minutes before the closing bell when CNBC reported that Bernanke received enough votes for a second term.

Tech Stocks Get Smacked As The Dollar Rallies:

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