Wednesday, January 26, 2011
Stock Market Commentary:
The major averages traded in a narrow range on Wednesday as new home sales surged and the Fed held rates steady near historic lows. The benchmark S&P 500 index managed to hit a new recovery high which took pressure off this current (and robust) 22-week rally. The fact that the bulls showed up and quickly quelled the bearish pressure suggests this rally has more room to go.
State of the Union Is Strong & Fed Holds Rates Steady:
U.S. stocks edged higher one day after President Obama said the State of the union is strong. The Commerce Department said new home sales rose nearly +18% to a 329,000 annual pace which easily topped the Street’s estimate for a rise to 300,000. The percentage jump was the largest since 1992, and was led by a record +72% increase in the West in December. Elsewhere, the Federal Reserve concluded its first meeting of 2011 and decided to hold rates steady near historic lows and largely reiterated their recent stance and said the economy continues to improve.
Market Action- Market In Confirmed Rally; Week 22
It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines as this market proves resilient and simply refuses to go down. The market remains in a confirmed rally 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 here 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.