Economic Data Fails To Impress

SPX- Consolidating Near July's Highs

SPX- Consolidating Near July's Highs

Tuesday, February 14, 2012
Stock Market Commentary:

Stocks and a slew of other risk assets opened higher on Monday after the Greek parliament approved the closely contested austerity measures for their second bailout. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. It was also encouraging to see the S&P 500 break above its downward trendline and its longer term 200 DMA line. Looking forward, the S&P 500 has done a great job staying above its Q4 2011 high (~1292) and now has its sights set on its 2011, high near 1370. In addition, the bulls remain in control as long as the benchmark S&P 500 trades above 1292 and then its 200 DMA line.

Retail Sales Miss Estimates, Import and Export Prices Rise:

Before Tuesday’s open, investors digested the latest round of lackluster economic data. Retail sales grew by +0.4% last month which was half of the Street’s estimate for a gain of +0.8%. Excluding autos, retail sales rose by +0.7%, which topped the Street’s estimate for a gain of +0.5%. The Labor Department said import prices rose +0.3% while export prices rose +0.2% in January. Export prices matched estimates and topped December’s decline of -0.5%.

Market Outlook- New Rally Confirmed

Nearly all risk assets are extended by any normal measure and are due for a pullback to consolidate their recent gains. The key is to ascertain the “health” of the pullback to see if it is a short pause in a new uptrend or the beginning of a new downtrend. Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December. Now that the major U.S. averages scored a proper follow-through day the path of least resistance is higher. Looking forward, one can err on the long side as long as the benchmark S&P 500 remains above support (1292). Leadership is beginning to improve which is another healthy sign. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!

Stocks End Mixed

Thursday, February 24, 2011
Stock Market Commentary:
Stocks ended mixed on Thursday as geopolitical woes continued in the Middle East and both oil and gold negatively reversed (on a daily basis) after a large run. The current crisis in Libya remains in flux which is putting upward pressure on gold and oil and downward pressure on equities. The benchmark S&P 500 is up 100% from its March 2009 low, and still about -14% off its all time high from October 2007. On average, market internals remain healthy as the major averages pull back towards their respective 50 DMA lines to consolidate their recent move.

Jobless Claims, Durable Goods, & New Home Sales:

The Labor Department said weekly jobless claims fell by -22,000 to a seasonally adjusted 391,000 last week. The drop was seen as a net positive for the economy and the ailing jobs market. Durable goods orders topped estimates which also bodes well for the economic recovery. However, new home sales missed estimates which suggests the sluggish housing market has yet to recover. New home sales tanked -12.6% to a lower-than-expected annual rate of 284,000 units. Regional data was mixed but the South, where unit sales exceed all other regions combined, shows a -12.8% decline. The government is slated to release the latest reading on Q4 GDP before Friday’s open.
Market Action- Rally Under Pressure; Week 26
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines recently which is a healthy sign. From our point of view, the market remains in rally-mode until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.

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