Monday, June 28, 2010
Stock Market Commentary:
The major averages ended lower after the G-20 pledged to cut deficits in order to help stabilize the global economy and US consumer spending and personal income rose. The current rally is under pressure after the major averages fell back below their respective 200 DMA lines and suffered a series of ominous distribution days. On Monday, volume totals were reported lower on the NYSE and the Nasdaq exchange compared to Friday’s levels which were inflated due to the annual re-balancing in the small cap Russell 2000 Index. Decliners led advancers by a 20-to-17 on the NYSE and a 16-to-11 ratio on the Nasdaq exchange. There were only 15 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 9 issues that appeared on the prior session. Leadership has evaporated, and without a healthy crop of leaders hitting new highs it is hard for the major averages to sustain a rally. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange.
G-20 More Rhetoric, Less Action:
Over the weekend, G-20 leaders met in Toronto and pledged to cut their soaring deficits but failed to reach an agreement on an international bank tax. Advanced G-20 economies have agreed to cut their deficits by nearly -50% over the next three years in order to stabilize their debt-to-output ratios by 2016. Leaders said nations can move at their own pace and also pledged to fulfill existing stimulus plans. Before Monday’s opening bell, the Commerce Department said consumer spending rose +0.2% which topped the Street’s estimate. Elsewhere, personal incomes rose +0.4% and the savings rate jumped to the highest level this year.