Daily Market Commentary

Another Quiet Day On Wall Street

22 Dec

Wednesday, December 22, 2010
Stock Market Commentary:

The major US averages edged higher after the government revised Q3 GDP to +2.6% and existing home sales missed estimates. Keep in mind, that this is a shortened holiday week as all US markets will be closed on Friday in observance of Christmas. Market internals remain healthy, evidenced by an advancing advance/decline line and an expanding number of stocks reaching new 52-week highs.

GDP, ECB, & Housing Data:

The US government said third quarter GDP rose at a +2.6% annual rate. This topped some estimates for a +2.5% reading but fell short of the median estimate for a +2.8%. The Federal Reserve’s preferred inflation gauge, which excludes food and energy and tied to consumer spending, rose at a modest +0.5% pace for the slowest growth since records began in 1959. Elsewhere, sales of existing homes improved but remain slow. Existing home sales rose +5.6% last month to 4.68 million, which fell short of the Street’s estimates.
The European Central Bank will lend banks +149.5 billion euros ($196.8 billion) for three months to help them meet their liquidity needs over the year-end period. The ECB, which is based in Frankfurt, said 270 banks asked for assistance while which will be loaned at its average benchmark interest rate over the period. Tomorrow, a slew of European banks need to repay 96.9 billion euros in maturing 12-month loans and +38.2 billion euros in three-month loans on the Friday.

Market Action- Market In Confirmed Rally Week 17

It is encouraging to see the bulls show up in November and defend the 50 DMA lines for the major averages. 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. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.

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28 Mar
Daily Market Commentary

Another Quiet Day On Wall Street

SPX- Normal Consolidation After Strong Rally

SPX- Normal Consolidation After Strong Rally

Wednesday, March 28, 2012
Stock Market Commentary:

Stocks and other risk assets fell on Wednesday after the latest round of economic data was released. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 paused near its 2011 high (~1370) before moving higher and that level should now become support. The next level of support would be the 50 DMA line, then a deeper 5-9% pullback. It is important to note that the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.

Economic Fears Resurface:

Stocks fell on Wednesday as investors digested the latest round of mixed economic data. The Mortgage Bankers Association said weekly mortgage applications rose last week which bodes well for the ongoing housing recovery. The report showed that refinancing demand slid for a 6th consecutive week as interest rates edged higher. Meanwhile, the Commerce Department said durable goods missed estimates and rose at +2.2% in February. Future business investment also missed forecasts. Separately, investors were concerned after Ben Bernanke told ABC News Tuesday evening that the economy is still not out of the woods yet which raised the odds for QE3. Bernanke’s main concern is that this recovery is a shallow version of the Great Depression. After the 1929 meltdown (similar to 2008) the economy and stock market briefly rebounded before relapsing (largely due to poor decisions from the Government regarding both fiscal and monetary policy) in the mid 1930’s. The only thing that saved the economy in the late 1930’s was World War II. Bernanke doesn’t want to make the same mistake.

Market Outlook- Confirmed Rally

After a brief pullback most risk assets (mainly stocks and a slew of commodities) are back in “rally-mode” evidenced by the strong rally we have seen in recent days. This shallow pullback is considered healthy and shows how strong the bulls are at this point. However, if sellers show up and support is breached then the bears will have regained control of this market. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!
Coming Up This Week:
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Fed’s Bullard speaks, FDA discusses obesity drugs
THURSDAY: GDP, jobless claims, corporate profits, Fed’s Plosser speaks, 7-yr note auction, farm prices, Fed’s Lacker speaks; Earnings from Best Buy, Research In Motion
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Stringer’s last day as Sony CEO
Source: CNBC.com
 

16 Feb
Daily Market Commentary

Stocks Rally On Healthy Economic Data

Euro- Finding Support Near Recent Lows

Euro- Finding Support Near Recent Lows

Thursday, February 16, 2012
Stock Market Commentary:

Stocks and a slew of other risk assets were quiet on Thursday as the latest round of stronger than expected economic data was released. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. It was also encouraging to see the S&P 500 break above its downward trendline and its longer term 200 DMA line. Looking forward, the S&P 500 has done a great job staying above its Q4 2011 high (~1292) and is flirting with 1356 which corresponds with July’s high. The next level of resistance is 2011’s high just above 1370. The bulls remain in control as long as the benchmark S&P 500 trades above 1292 and then its 200 DMA line.

Healthy Economic Data Helps Stocks:

Stocks were relatively quiet on Thursday even though the latest round of economic data was rather healthy in the U.S. The big news was that initial jobless claims fell sharply last week to 348,000, which was lower than the Street’s estimate for 365,000. The report also showed that continuing claims slid to 3.43 million from 3.53 million. A separate report showed that housing starts rose 699,000 last month which also topped the Street’s estimate for 671,000. Building permits rose slightly to an annualized rate of 676,000, which just beat the Street’s estimate for 675,000. The Philadelphia Fed Manufacturing Index rose more than expected to 10.2 in February. Finally, news on the inflation front was mild. The producer price index rose by +0.1% in January which was less than the average estimate for an increase of +0.3%. However, core prices jumped to +0.4% which was double the average estimate.

Market Outlook- Confirmed Rally

Nearly all risk assets are extended by any normal measure and are due for a pullback to consolidate their recent gains. The key is to ascertain the “health” of the pullback to see if it is a short pause in a new uptrend or the beginning of a new downtrend. Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December. Now that the major U.S. averages scored a proper follow-through day the path of least resistance is higher. Looking forward, one can err on the long side as long as the benchmark S&P 500 remains above support (1292). Leadership is beginning to improve which is another healthy sign. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!
 

09 Dec
Daily Market Commentary

S&P 500 Perched Below Resistance

Thursday, December 9, 2010
Stock Market Commentary:

It was another relatively quiet day on Wall Street as the euro fell and jobless claims edged lower. In the future, to avoid any confusion, we are no longer going to use outside resources to label, instead focus on what has worked exceptionally well for us over 7 years, our own analysis. A popular outside source changed their label on Friday to Market in a confirmed rally, without a proper FTD emerging. This is bizarre and frankly plain irresponsible. From our standpoint, the rally that began on September 1, 2010 is still intact and we said that in our commentary on November 16, 2010 when the outside source said the rally ended –Full Story here. However, we changed it to be inline with them but that was clearly a mistake. If anyone has any questions about this, please feel free to fill out our contact form and we will be happy to address it in more detail.
Euro Sinks As Debt Woes Flare:
Overnight, the euro fell which put mild pressure on dollar denominated assets. The Labor Department said initial jobless claims fell to 421,000 last week which was less than the Street’s estimate of 425,000. Remember that lower jobless claims are a net positive for the ailing jobs market and they tend to tick lower this time of year due to increased hiring for the holiday season.

Market Action- Market In Confirmed Rally Week 15

It is encouraging to see the bulls show up and defend the 50 DMA lines for the major averages. 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. Put simply, stocks are strong. Trade accordingly.

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