Stocks React To Healthy Data

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.

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Stocks Down; Dollar Up

Wednesday, March 24, 2010
Market Commentary:

The major averages, US Treasuries, the euro and a slew of commodities pulled back as the dollar advanced after Portugal’s debt was downgraded by Fitch.The volume total on the NYSE was about even compared to Monday’s totals, while volume was reported slightly higher on the Nasdaq exchange. Decliners led advancers by more than a 2-to-1 ratio on the NYSE and on the Nasdaq exchange. There were 29 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 77 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges.

Euro Tanks As Dollar Rallies:

Overnight, Fitch Ratings downgraded Portugal due to its ballooning debt concerns. This, coupled with the fact that France and Germany are close to reaching a deal with the IMF to rescue Greece sent the euro plunging. Investors are concerned that more European countries will need to be bailed out as they struggle to deal with their mounting debt. The euro fell against 12 of its 16 peers and hit a new 10-month low against the greenback. The US dollar rallied which put pressure on US stocks and commodities. The Reuters/Jefferies CRB Index of commodities slid to a five-week low, dragged lower by oil, gold, sugar, and copper.

Economic Data Mixed:

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Stocks End Higher on Mixed Economic Data

The major averages closed XXXXXX as investors digested the latest round of economic data. Volume, an important indicator of institutional sponsorship, was XXXXXX than Tuesday’s levels, revealing a lack of appetite for accumulating shares from very large and influential institutional investors. Advancers led decliners by nearly a X-to-1 ratio on the NYSE and by a X-to-2 ratio on the Nasdaq exchange. There were XX high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, XXXXXX from the total of 52 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
Investors digested a flurry of economic data on Wednesday. The Mortgage Bankers’ Association (MBA) said its purchase application index fell -11.6% while the refinance index fell -10.1% which were way below consensus. The report showed that long term mortgage rates remain extremely low with 30-year loans averaging +4.92%. At 10:00 AM EST, the Commerce Department said new home sales plunged -11% in November to a 355,000 annual rate which fell short of estimates. Furthermore, the report included downward revisions of 42,000 in the prior two months. New home sales measure the number of newly constructed homes with a committed sale during the prior month.
Elsewhere, personal income in November rose by +0.4%, following a rise of +0.3% in October. This was just below the Street’s estimate of a +0.5% gain. The wages and salaries component of the report rose +0.3% after a +0.1% increase in October. The report showed that inflation eased last month which since the headline PCE price inflation fell to +0.2% from +0.3% in October. Core PCE inflation was unchanged in November from up +0.2% in October.
Looking at the market, the Dow Jones Industrial Average and benchmark S&P 500 index both closed near their respective resistance levels as they quietly consolidate their recent gains in lighter pre-holiday levels. Meanwhile, the tech-heavy Nasdaq composite continues to lead its peers as it managed to hit another 2009 high today. Remember that the S&P 500 plunged -57% from its all time high in October 2007 to its March 2009 low. Since then, the market has rebounded over +65% but still remains -29% below its all-time high of 1,576. In addition, the index has retraced nearly -50% of its decline which is a popular Fibonacci level used by many technical analysts. Normally, markets rebound approximately 50% before resuming their prior trend (which would be another leg down in this case). Longstanding readers of this column know that we do not predict what will happen, instead we remain open to any possible scenario that may unfold and interpret what we see happening.
PICTURED: The

S&P 500 retraced 50% of its prior decline

S&P 500 retraced 50% of its prior decline


Wednesday, December 23, 2009
Market Commentary:
The major averages closed higher as investors digested a flurry of mixed economic data. Volume, an important indicator of institutional sponsorship, was lighter than Tuesday’s levels, revealing a lack of appetite for accumulating shares from very large and influential institutional investors. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. There were 63 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 from the total of 52 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
Housing Data:

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