Day 1 Of A New Rally Attempt

Monday, August 25 ,2010
Stock Market Commentary:

The major averages ended higher which marked Day 1 of a new rally attempt as the market snapped a four day losing streak. Volume reported on the NYSE and the Nasdaq exchange fell on Wednesday compared to Tuesday’s levels which suggested large institutions were not aggressively buying stocks. Advancers led decliners by over a 4-to-3 ratio on the NYSE and by over an 8-to-5 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week highs on the NYSE but trailed on the Nasdaq exchange. There were 6 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, the same number that appeared on the prior session.

New Home Sales & Durable Goods Orders Are Weak:

Stocks opened lower after new home sales plunged to a record low and durable goods orders fell short of analyst estimates. The Commerce Department said new home sales unexpectedly slid last month to the lowest level on record which suggests the housing market remains very weak. Sales fell -12% from June to an annual pace of 276,000, the lowest level since data began in 1963! The report also showed that the median home price fell to $204,000 which was the lowest reading since late 2003. Meanwhile, durable goods orders, which are goods that are made to last at least three years, rose less than forecast in July. Durable goods orders rose +0.3%, which fell short of the +3% gain analysts had expected. Excluding transportation equipment, demand unexpectedly plunged -3.8% which is the largest monthly decline since January 2009 and lower than the Street’s forecast for a +0.5% increase.

Market Action- In  A Correction:

Wednesday marked Day 1 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Monday’s negatively reversal coupled with Tuesday’s ugly distribution day effectively ended the latest rally attempt. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
The Market Is In A Correction, Does Your Broker Know?
If not, Contact us to learn about our Money Management Services. ACT NOW!

Stocks Rally After Hitting Fresh 2010 Lows

Tuesday, May 25, 2010
Stock Market Commentary:

The major averages closed mixed after geopolitical tensions esclated between North and South Korea. Volume was higher than Monday’s levels which was a welcomed sign. Decliners led advancers by nearly a 2-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. New 52-week lows trumped new 52-week highs on the Nasdaq exchange and on the NYSE. Leadership dried up on Tuesday as there were 0 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 4 issues that appeared on Friday. It is difficult for the market to mount a sustained rally without a healthy crop of strong leaders.

North Korea Cuts Ties With South Korea:

Overnight, stocks plunged in Asia and Europe after bank borrowing costs jumped and North Korea said it will sever ties with South Korea as political tensions continue to mount. On Monday, the US announced plans to conduct anti-submarine exercises with South Korea after the March 26 torpedoing of a South Korean warship. The US dollar rallied on the news which sent the a slew of dollar denominated assets lower on the news (i.e. stocks and commodities).

Financial Stocks Rally:

In the US, Representative Barney Frank, who will lead congressional talks on the much anticipated financial-regulation bill, said Senate language that would require commercial banks to prevent swap-trading “goes too far.” This helped a slew of financial stocks rally from fresh 2010 lows. Goldman Sachs (GS), Morgan Stanley (MS), Bank of America (BAC), among others, positively reversed (opened lower and closed higher) which was a welcomed sign.

Market Action- In A Correction:

All the major averages sliced below Friday’s lows which effectively ended the current rally attempt and reset the base count. However, the benchmark S&P 500 managed to close higher for the day which marked Day 1 of a new rally attempt for that index.  In addition, the earliest a proper follow-through day (FTD) could occur would be Friday, providing Tuesday’s lows are not breached. However, if at anytime, Tuesday’s lows are breached, then the day count will be reset. What does all of this mean for investors? Simple, the market remains in a steep correction which reiterates the importance of adopting a strong defense stance until a new rally is confirmed. Trade accordingly.

Day 1 Of A New Rally Attempt

Monday February 1, 2010
Market Commentary:

Stocks rallied on Monday continuing the recent string of a strong start to the week before the bears show up and send stocks lower by Friday. Volume patterns have turned bearish recently which suggests large institutions are aggressively selling, not buying stocks. New 52-week highs still continue to outnumber new 52-week lows on the NYSE and on the Nasdaq exchange which is a welcomed sign.

Economic Data Is Healthy:

Stocks rebounded from a three-month low and marked Day 1 of a new rally attempt after a series of stronger than expected economic data points were released. Manufacturing reports in the US, Europe and China all showed that the global economic recovery is accelerating which helped allay concerns that it was running out of steam. The US dollar fell which helped a slew of dollar denominated assets (mainly stocks and commodities) rally. The Institute for Supply Management said that US manufacturing enjoyed its largest gain since August 2004 which was a welcomed sign.

Earnings Are Solid:

Continue reading

Day 1 Of A New Rally Attempt

Wednesday, January 27, 2010 Market Commentary

The major averages positively reversed on Wednesday which marked day 1 of a new rally attempt. It was encouraging to see volume expand compared to the prior session which indicated that large instiutions were accumulating stocks. Decliners led advancers by a 10-to-9 ratio on the NYSE and trailed by a 5-to-8 on the Nasdaq exchange. There were 10 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 6 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.

Fed Decision and The Economy:

Continue reading

Day 1 Of A New Rally Attempt

Monday, January 25, 2010
Market Commentary:

Stocks closed with modest gains on Monday as fears subsided that Ben S. Bernanke may not be reconfirmed as chairman of the Federal Reserve. Volume was reported lower than Friday’s session on the Nasdaq exchange and on the NYSE which suggested large institutions were not aggressively buying stocks. Monday’s gains were enough to mark Day 1 of a new rally attempt for the major averages. Advancers led decliners by a 23-to-16 ratio on the NYSE and were about even on the Nasdaq exchange. There were only 7 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 4 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.

Hong Kong Stock Market Falls -10% From Recent High:

Continue reading