Debt Deadline; To Be, Or Not To Be?

Monday, July 25, 2011
Stock Market Commentary:

Stocks opened lower due to the ongoing debt saga in Washington D.C. However, the bulls showed up and quelled the bearish pressure after Republicans and Democrats prepared separate plans to raise the debt limit before the August 2, 2011 deadline. It was very encouraging to see the Nasdaq 100 break out of its current multi month base and hit new 2011 high on Friday! Technically, it is encouraging to see the major average find support and bounce off their respective 50 DMA lines in the middle of July. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Debt Deadline, Greek Debt Cut (Again), & Earnings Continue In Droves!

On Monday, news spread that both Republicans and Democrats prepared separate plans to raise the debt limit and to avoid a technical default by next Tuesday. In Europe, Moody’s, the popular rating agency, cut Greece’s debt rating further into junk territory which added to the downward pressure in equity markets across much of the developed world. As the political drama continues to unfold, a slew of companies are slated to released their Q2 results this week. So far, over +80% of the S&P 500 companies that reported earnings topped estimates which bodes well for the ongoing economic recovery. Here is a short list of some of the high ranked/high profile companies slated to release Q2 results this week: BIDU, AMZN, NFLX, GMCR, WFM, ACOM, POT, DECK, JAZZ, CRR, CLF, SRCL, BIIB, & TNAV. As always, in addition to analyzing the actual numbers we tend to focus on how a company (and the market) reacts to data.

Market Outlook- Confirmed Rally

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests the rally is back in a confirmed rally as all the major averages are now flirting with fresh 2011 highs. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

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Healthy Week On Wall St; Stocks Close Above Resistance!

Friday, July 23, 2010
Stock Market Commentary:

Stocks ended higher this week as investors digested a slew of earnings and economic data. Volume, an important indicator of institutional sponsorship, was reported slightly higher than Thursday’s totals on both exchanges while the major averages ended unanimously higher. Advancers trumped decliners by over a 3-to-1 ratio and new 52-week highs outnumbered new 52-week lows on both major exchanges. There were 39 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, higher from the 23 issues that appeared on the prior session.

Monday & Tuesday’s Action:

Stocks ended higher on Monday after the National Association of Home Builders/Wells Fargo confidence index slid to 14 in July which is the the lowest reading since April 2009 and down from last month’s reading of 16. Any reading below 50 means that respondents consider the current environment as poor. Over the next few weeks, it will be very interesting to see how companies fared last quarter and, equally important, to see how the market reacts to the numbers. Analysts believe that Q2 earnings for S&P 500 companies rose +34%. So far, the reaction has been positive.
Stocks rallied on Tuesday after several high profile companies released their Q2 results. Initially, stocks opened lower due to a general disappointment with their numbers but the bulls showed up in the second half of the session which was an encouraging sign. A slew of housing stocks rallied after building permits rose last month. However, housing starts, which measure new production, fell in June to their lowest level since October 2009 after the government tax incentive expired. 

Wednesday- Friday’s Action:

Stocks got hit on Wednesday after President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act while Federal Reserve Chairman Ben Bernanke testified on Capitol Hill and a slew of earnings were released. On Thursday, the major averages vaulted above their two month downward trendlines and their respective 50 DMA lines which was a very healthy sign. The large rally was sparked after healthy economic data was released from Europe. The strong economic data helped allay concerns that an economic slowdown may derail the global recovery. Stocks ended higher on Friday after the latest round of large cap earnings were released and the results of the European Stress Test were mild. 

Market Action- Confirmed Rally:

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