Daily Market Commentary

Strong Start Fizzles In PM

23 Nov

Market Commentary:

The major averages opened sharply higher as the US dollar plunged after the latest round of stronger-than-expected housing data was released. Volume, a critical component of institutional demand, was lower than Friday’s levels on the NYSE and on the Nasdaq exchange which was expected since a series of options expired on Friday. Advancers trumped decliners by over a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. There were 41 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher from the 12 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Healthy Housing Data Lifts Stocks

Investors sent stocks higher after the National Association of Realtors released a report which showed that sales of existing homes topped estimates. Sales rose +10% in October to the highest level since February 2007 which helped offset concern that the housing recovery was in jeopardy. Last week, stocks got hit after a series of weaker-than-expected housing market reports were released. So Monday’s news was a welcomed sign that record low interest rates and a national home buyer credit would aid this ailing sector.
Gold surged to a fresh all time high overnight as the dollar snapped a three day winning streak. Crude oil jumped above $79 a barrel and copper jumped to a 14-month high before pulling back. Commodity markets rallied and the dollar fell after Iran’s military ran some exercises in the Middle East.

Fed Watch:

Charles Evans, president of the Federal Reserve Bank of Chicago, told the Financial Times that US interest rates may stay near record lows (just above zero) until “late 2010, perhaps later.” This helped allay concern that the Fed may begin raising rates in early 2010. In other central bank news, the Bank of Israel unexpectedly raised their benchmark interest rate for a second time since the recovery began at the end of Q1 2009. The bank said economic growth had accelerated and inflation approached the top of its target range. The Tel Aviv 25 Index rose +1% on the news.
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Newer Stocks Fall As Investors Digest A Slew Of Economic Data
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23 Mar
Daily Market Commentary

Stocks Edge Higher On Stronger Than Expected Housing Market

Tuesday, March 23, 2010
Market Commentary:

The major averages ended higher after stronger-than-expected data was released from the ailing housing market. Volume totals were higher compared to Monday’s totals on both major exchanges. Advancers led decliners by over a 2-to-1 ratio on the NYSE and by a 2-to-1 ratio on the Nasdaq exchange. There were 77 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 45 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges.

Stronger Than Expected Housing Data Lifts Stocks:

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04 Dec
Daily Market Commentary

Week In Review: Leaders Get Hit As Market Churns

Friday 12.04.09

Market Commentary:

Stocks ended the week higher as investors digested a slew of economic data. On Friday, stocks edged higher after the government released a stronger than expected jobs report. Volume, an important indicator of institutional sponsorship, was higher than Thursday’s levels on both major exchanges. The fact that the major averages closed in the lower half of their daily ranges on heavier volume could be interpreted as churning- which is not a healthy sign. Advancers led decliners by a 2-to-1 ratio on the NYSE and by well over a 2-to-1 ratio on the Nasdaq exchange. There were 45 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, one more than the total of 44 issues that appeared on the prior session. Leadership among high-ranked growth stocks had dried up in recent weeks, so the expansion in new highs this week has been a welcome improvement. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Mon-Friday’s Action:

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25 Nov
Blog

Bulls Gobble Up Stocks As Volume Recedes

Market Commentary- Wednesday 11.25.09:
The major averages advanced on Wednesday as the greenback slid to a 14-year low against the yen after the latest round of economic data was released.  As expected, volume, a critical component of institutional demand, was lower than Tuesday’s levels ahead of the the Thanksgiving day holiday. The stock market will be closed on Thursday and is slated to close early on Friday (1pm EST) in oberservence of the holiday. Advancers led decliners by over a 2-to-1 ratio on the NYSE but trailed by a narrow margin on the Nasdaq exchange. There were 22high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher from the 12 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Weak Dollar:

Stocks rallied on anemic volume the day before thanksgiving thanks to an array of factors. First, the US dollar got smacked which helped the bulls send stocks higher. For months, we have written about the inverse relationship between the US dollar and dollar denominated assets (i.e. stocks and commodities). The dollar index lost over -1.1% which was its largest single day percentage drop in nearly four months! Wednesday’s decline put the dollar Index at a fresh 12-month low. The second factor that helped stocks advance today was a series of economic data. Home sales, jobless claims and consumer confidence were relatively healthy which helped support the notion that the economic recovery is strengthening. The other positive data point came from higher oil prices. The government said that energy demand rose for a second consecutive week (thanks to a stronger economy) which sent crude oil up nearly $2 a barrel. Gold also hit a new all time high as the dollar fell and a report was released that the Indian central bank may buy more bullion for its reserves.

Economic Data:

On the economic front, the government said that weekly jobless claims fell to their lowest level since September 2008 which led many to speculate that the worst is over for the labor market. The Labor Department said the number of Americans filing claims for unemployment benefits fell to 466,000 last week which was a welcomed sign. The Reuters/University of Michigan index of consumer confidence was 67.4, higher than the average estimate of 67. Meanwhile, the Commerce Department said consumer spending rose +0.7% last month which topped the Street’s estimate for a +0.5% reading and new home sales jumped by +6.2%. On Tuesday, the Federal Reserve raised its forecast for 2010 economic growth to a range of 2.5%-to-3.5%, up from +2.1%-to-+3.3%. The Fed also signaled that it will be more accepting of a weaker US dollar in the near term to help spur economic growth.

What Matters Most- Price & Volume:

Looking at the market, the current rally remains intact as the major averages refuse to go down and continue marching higher. This is a strong sign of institutional sponsorship but concerns remain as volume continues to dry up as the the market crawls higher and leadership remains inordinately thin. This action suggests anything is possible but until a broad based sell off occurs, the bulls remain in control.

24 Nov
Daily Market Commentary

Stocks Fall As Investors Digest A Slew Of Economic Data

Market Commentary

Stocks closed lower as investors digested a slew of economic data. Volume, a critical component of institutional demand, was mixed compared to Monday’s levels; higher on the Nasdaq and lower on the NYSE. The higher volume on the Nasdaq marked a distribution day for that exchange but the lower volume on the NYSE helped those indexes avoided that fate. Decliners led advancers by over a 21-to-17 ratio on the NYSE and by over a 16-to-11 ratio on the Nasdaq exchange. There were 12 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher from the 41 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Banks Under Pressure-Again

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19 Nov
Daily Market Commentary

Sour Economic Data Hurts Stocks

Stocks Got Smacked As The Dollar Rallies:

Stocks fell across the globe as the US dollar rallied and concern spread regarding the underlying health of the economic recovery. Volume, a critical component of institutional demand, was higher than Wednesday’s levels across the board which marked a distribution day for the major averages. Decliners trumped advancers by about a 4-to-1 ratio on the NYSE and Nasdaq exchange. There were only 10 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, lower than the 40 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Tepid Economic Data Hurts Stocks

Stocks experienced their largest intra day decline this month after the latest round of ominous economic data was released. The tepid economic data led many to question how long the global economic recovery will last and sent investors flocking to the US dollar for perceived safety. Before Thursday’s opening bell, the Labor Department said jobless claims (a.k.a the number of Americans filing claims for unemployment benefits) was unchanged at a 10-month low. Stocks also got hit after a report was released that showed mortgage delinquencies surged. So far, since the financial crisis began in 2007, writedowns (a.k.a losses) of mortgage-backed debt has surpassed $1.7 trillion at some of the world’s largest financial firms. The spike in mortgage delinquencies was due to a 26-year high in unemployment and a down tick in wages. The Mortgage Bankers Association said that that out of every six home loans insured by the Federal Housing Administration there is at least one late payment and +3.32% of those loans were in foreclosure last quarter. This was the highest reading for both measures in at least 30 years and bodes poorly for the troubled housing market.
Elsewhere, the Organization for Economic Cooperation and Development (OECD) doubled its growth forecast for industrialized nations in 2010 to +1.9%. However, the group said that record debt levels may hinder future growth. Separately, the Federal Reserve Bank of Philadelphia released its general economic index which topped estimates and suggests a slight improvement in that region. Billionaire investor, Bill Gross, who runs the world’s largest bond fund- Pacific Investment Management Co. (PIMCO) in Newport Beach, California, published a report today and said that he believes record low interest rates may cause new asset bubbles for stocks and risky bonds.

Looking At The Market- Analyzing Price & Volume:

Looking at the market, leading stocks came under a little pressure today but for the most part continue to hold up well. The market caught a bid (rallied) in the last hour of trade which is typically an encouraging sign and shows that buyers are still out there and willing to show up and defend support. Highly liquid technology stocks continue to be an important area of strength as investors continue to pile into a very narrow group of stocks. Gold and silver stocks are another important area that continues to outperform. As always, it is imperative to isolate strength and let the market guide you.