27 Oct
Daily Market Commentary

Stocks Mixed, Commodities Down; USD Up

Wednesday, October 27, 2010
Stock Market Commentary:

Stocks opened lower then rallied back into positive territory as the US dollar rallied, the S&P Case-Shiller index disappointed investors, and consumer confidence topped estimates. Volume patterns remain healthy as the major averages have now begun the 9th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.’

Economic Data Is Strong; Market Falls:

Stocks and commodities fell as the USD continued rallying after the latest round of solid economic data was released. Durable goods orders rose +3.3% last month which topped estimates. Meanwhile, the Commerce Department said sales of new houses jumped +6.6% last month to a 307,000 annual rate which also topped estimates. The stronger than expected economic data caused many to believe that the Fed may not completely enact QE 2 when they meet next Wednesday. So far, the market has been rising on the notion that the Fed will step up and buy another trillion dollars (or so) worth of “safe” investments (i.e. bonds). However, with the recent bout of “stronger than expected economic data, investors are concerned that the Fed will “only” buy $500 billion worth of bonds. Keep in mind that in 2009, the Fed bought $1.5 trillion worth of “safe” assets which helped propel other so-called “riskier” assets (i.e. stocks and commodities) higher.
Market Action- Confirmed Rally, Week 9:

Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The S&P 500 sliced below its two month upward trendline (shown above) which is not ideal. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

2-Weeks Free!
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide robust trading ideas across all asset classes. Since 2004 we have outperformed the S&P 500 on a regular basis. These results are based solely on our weekly research. All our prior reports (6 years) are available upon request.

How we can improve your performance:

  • Achieve better results in the market by working with an objective third party.
  • Provide you with sound buy/sell ideas in real-time.
  • Provide objective feedback on your investment ideas and market outlook.
  • Contribute profitable ideas to your investment committee (if applicable).
  • All investment ideas are fully transparent, unbiased, and based on market action, not opinions.
  • Help create uniformed structure within your organization.

Contact Us To Learn How We Can Help You!

26 Oct
Daily Market Commentary

Quiet Day On Wall Street

Tuesday, October 26, 2010
Stock Market Commentary:

Stocks opened lower then rallied back into positive territory as the US dollar rallied, the S&P Case-Shiller index disappointed investors, and consumer confidence topped estimates. Volume patterns remain healthy as the major averages have now begun the 9th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges

Economic Data Mixed:

Stocks opened lower as the USD rallied. However, share prices quickly recovered after the Conference Board’s confidence index rose to 50.2 from a revised 48.6 in September. This helped investors look past a sour report from the ailing housing market. The S&P/Case-Shiller index of home prices rose +1.7% from August 2009 but was the smallest year over year gain since February. The report showed that home prices in 20 major U.S. cities rose at a slower pace than forecast in August. Housing stocks continue to go nowhere and we would be remiss not to note that the residential building group is currently the second worst performing industry group in the market.

Market Action- Confirmed Rally, Week 9:

Continue reading

25 Oct
Daily Market Commentary

Stocks Rally On Strong Housing Data

Monday, October 25, 2010
Stock Market Commentary:

Stocks, oil, and gold opened higher as the dollar fell, after the G-20 concluded their meeting in South Korea over the weekend. Volume patterns remain healthy as the major averages have now begun the 9th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

G-20 Meeting & Housing Data:

Over the weekend, the G-20 met in South Korea and agreed to a major overhaul for the International Monetary Fund (IMF). The change represents a shift in the global economic power, away from the developed world and into the emerging markets. The overhaul will increase the IMF’s role in managing the global economy and will give emerging nations more control on how the organization is run.  The overhaul will also give over +6% of the IMF voting rights to countries such as China and India, while Europe will giveup two board seats. The G-20 also decided to give the IMF a role in monitoring global trade imbalances and exchange rates.
In the US, existing homes jumped +10% in September which was the highest jump on record and a welcomed sign for the ailing housing market. The National Association of Realtors said existing home sales rose to a 4.53 million annual rate, up from 4.12 million in August. This topped the Street’s estimate for an increase to a 4.3 million. However, the report did show that the median price slid -2.4% from a year earlier.
Market Action- Confirmed Rally, Week 9:
Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The S&P 500 sliced below its two month upward trendline (shown above) which is an ominous sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

2-Weeks Free!
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide robust trading ideas across all asset classes. Since 2004 we have outperformed the S&P 500 on a regular basis. These results are based solely on our weekly research. All our prior reports (6 years) are available upon request.

How we can improve your performance:

  • Achieve better results in the market by working with an objective third party.
  • Provide you with sound buy/sell ideas in real-time.
  • Provide objective feedback on your investment ideas and market outlook.
  • Contribute profitable ideas to your investment committee (if applicable).
  • All investment ideas are fully transparent, unbiased, and based on market action, not opinions.
  • Help create uniformed structure within your organization.

Contact Us To Learn How We Can Help You!

22 Oct
Daily Market Commentary

Stocks End Volatile With Modest Gains

Friday, October 21, 2010
Stock Market Commentary:

Stocks ended a volatile week with modest gains as investors digested a slew of economic and earnings data. Volume patterns remain healthy as the major averages have now finished their 8th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

Monday- Wednesday’s Action: Volatile Trading

Stocks ended higher on Monday as investors digested mild economic data and prepared for a busy week of Q3 results. U.S. industrial production unexpectedly fell -0.2% last month which fell short of the small gain expected on Wall Street. At 10:00 AM EST, US homebuilder confidence rose in October to the highest level in four months which was a welcomed sign for the ailing housing market. The National Association of Home Builders/Wells Fargo confidence index rose to +16 which topped estimates and exceeded the prior month’s reading of 13.  After Monday’s close, International Business Machines (IBM) and Apple Inc. (AAPL) released their Q3 results and fell in after hours trade.
Overnight, China’s central bank unexpectedly raised rates for the first time since 2007. China’s central bank raised rates to “stay ahead of the inflation curve.” The move sent the USD higher and a slew of stocks and commodities lower. Before Tuesday’s open, housing starts unexpectedly rose to a five-month high which was a net positive for the ailing housing market. However, earnings failed to impress investors as a slew of high-profile companies got smacked after releasing their latest quarterly data. Apple Inc. (AAPL), IBM, Bank of America (BAC), VMWare (VMW) were among few stocks that got smacked after releasing their latest quarterly numbers. Goldman Sachs (GS) and Coca Cola Company (KO) opened higher after earnings topped estimates.
Stocks came roaring back on Wednesday and enjoyed a strong boost from the latest round of earnings and renewed speculation that the Federal Reserve will enter another round of quantitative easing (a.k.a. QE 2). Concurrently, the USD fell which helped a slew of dollar denominated assets rally; mainly stocks and commodities rally. At 2:00pm EST, the Fed’s Beige Book was released which was largely priced in to the market. The Beige Book is typically published two weeks before a Federal Open Market Committee (FOMC) meeting.

Thursday & Friday’s Action: Stocks Consolidate Recent Move

Before Thursday’s open, the Labor Department said initial jobless claims fell by –23,000 last week to 452,000. At 10:00 AM EST, the Conference Board’s index of leading indicators rose slightly and matched forecasts. On the earnings front, a slew of high profile companies released their latest quarterly results including but not limited to: McDonald’s Corp. (MCD, Netflix Inc. (NFLX), EBAY Inc., (EBAY), and United Parcel Service (UPS), On average, the numbers topped estimates but the reactions were mixed. On Friday, stocks were confined to a relatively tight trading range as traders awaited this weekend’s G-20 Meeting. So far, Q3 results have topped estimates which is a net positive for the ongoing economic recovery.
Market Action- Confirmed Rally Week 8 Just Ended:
Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The S&P 500 sliced below its two month upward trendline (shown above) which is an ominous sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

2-Weeks Free!
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.

21 Oct
Daily Market Commentary

Stocks & Euro Edge Higher; Oil & Gold Fall

Thursday, October 21,2010
Stock Market Commentary:

Stocks opened higher as the dollar fell (what else is new?) and the latest round of economic and earnings data was released. We sent out a note shortly after the open to our instituional advisory clients infomring them of the negative divergence we saw between Oil, Gold, and other capital markets. For most of the morning, oil and gold were down while the euro and US equities were up. Normally, they all move in tandem. Therefore, we were not surprised to see the major averages soften in the late morning. Heretofore, volume patterns remain healthy as the major averages are now in the latter half of their 8-week rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

China’s Q3 GDP Growth Slows, But Inflation Rises:

Overnight, China said its economy grew +9.6% in the third quarter which was down from the +10.3% enjoyed in the second quarter but topped analyst estimates of +9.5%. Inflation rose in September and hit a 23-month high of +3.6%, which matched market expectations. The report also showed that GDP in the first three quarters of 2010 totaled 26.866 trillion yuan, which is on track to surpass 2009’s total of 34.05 trillion.

US Earnings & Economic Data Are Strong:

Before Thursday’s open, the Labor Department said initial jobless claims fell by –23,000 last week to 452,000. At 10:00 AM EST, the Conference Board’s index of leading indicators rose slightly and matched forecasts. On the earnings front, a slew of high profile companies released their latest quarterly results including but not limited to: McDonald’s Corp. (MCD, Netflix Inc. (NFLX), EBAY Inc., (EBAY), and United Parcel Service (UPS), On average, the numbers topped estimates but the reactions were mixed. The fact that the major averages continue to advance on the latest round of earnings and economic data bodes well for this 8-week rally. On the political front, Tim Geithner said he will lobby other finance ministers this weekend at the G-20 meeting to advance efforts to “rebalance” the world economy so it is less reliant on U.S. consumers.

Market Action- Confirmed Rally Week 8:

Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market appears to be placing an interim top here as the major averages consolidate their recent move. The S&P 500 sliced below its two month upward trendline (shown above) which is not a healthy sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

Want Better Results?
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.

20 Oct
Daily Market Commentary

Stocks Bounce Back As Dollar Falls

Wednesday, October 20, 2010
Stock Market Commentary:

Stocks bounced back as the US dollar fell to consolidate Tuesday’s large move. Heretofore, volume patterns remain healthy as the major averages continue their 8-week rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

Q3 Earnings & QE2 Speculation Lift Stocks:

Stocks got a strong boost from the latest round of earnings and renewed speculation that the Federal Reserve will enter another round of quantitative easing (a.k.a. QE 2). Concurrently, the USD fell which helped a slew of dollar denominated assets rally; mainly stocks and commodities. At 2:00pm EST, the Fed’s Beige Book was released which was largely priced in to the market. The Beige Book is typically published two weeks before a Federal Open Market Committee (FOMC) meeting. Every time, a different Fed district bank compiles and publishes anecdotal evidence on how the economy looks from each of the 12 Federal Reserve districts. The book is used to give the Fed and investors a better gauge on how the economy is doing in each of the 12 districts around the country.

Market Action- Confirmed Rally Week 8:

Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market appears to be placing an interim top here as the major averages consolidate their recent move. The S&P 500 sliced below its two month upward trendline (shown above) which is not a healthy sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

Want Better Results?
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.
Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.

How We Can Help You:

  1. We employ a discretionary long/short global macro strategy that is profitable in both bull and bear markets.
  2. Achieve better results in the market by working with an objective third party who is not an internal “yes” man.
  3. Provide you with sound buy/sell ideas in real-time
  4. Provide objective feedback on your investment ideas and market outlook
  5. Contribute profitable ideas to your investment committee
  6. All investment ideas are fully transparent, unbiased, and based on market action, not someone’s opinion.
  7. Help create uniformed structure within your organization!

Contact Us Today To See How We Can Help You!

19 Oct
Daily Market Commentary

All Asset Classes Fall; Dollar Rallies

Tuesday, October 19, 2010
Stock Market Commentary:

Stocks, commodities and a slew of other dollar denominated assets fell sharply on Tuesday after China raised rates and the latest round of economic and earnings data was released. Tuesday marked the 23rd anniversary for one of the largest declines in the history of the stock market. The Dow plunged -22% on October 19, 1987. Heretofore, volume patterns remain healthy as the major averages continue their 8-week rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes which suggests caution. On average, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

China Raises Rates & Earnings Fail To Impress:

Overnight, China’s central bank unexpectedly raised rates for the first time since 2007. China’s central bank raised rates to “stay ahead of the inflation curve.” The move sent the USD higher and a slew of stocks and commodities lower. In the US, housing unexpectedly rose to a five-month high which was a net positive for the ailing housing market. Earnings failed to impress investors as a slew of high-profile companies got smacked after releasing their latest quarterly data. Apple Inc. (AAPL), IBM, Bank of America (BAC), VMWare (VMW) were among few stocks that got smacked after releasing their latest quarterly numbers. Goldman Sachs (GS) and Coca Cola Company (KO) opened higher after earnings topped estimates.

Market Action- Confirmed Rally Week 8:

Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market appears to be placing an interim top here as the major averages consolidate their recent move. The S&P 500 sliced below its two month upward trendline (shown above) which is not a healthy sign. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy.  Trade accordingly.

Want Better Results?
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.

Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.

How We Can Help You:

  1. We employ a discretionary long/short global macro strategy that is profitable in both bull and bear markets.
  2. Achieve better results in the market by working with an objective third party who is not an internal “yes” man.
  3. Provide you with sound buy/sell ideas in real-time
  4. Provide objective feedback on your investment ideas and market outlook
  5. Contribute profitable ideas to your investment committee
  6. All investment ideas are fully transparent, unbiased, and based on market action, not someone’s opinion.
  7. Help create uniformed structure within your organization!

Contact Us Today To See How We Can Help You!

18 Oct
Daily Market Commentary

Stocks Rally As Dollar Falls

Monday, October 18, 2010
Stock Market Commentary:

Stocks rallied as the US dollar fell and the latest round of economic and earnings data hit the wires.  Volume patterns remain healthy as the major averages continue their 8-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks.   It is also encouraging to see, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

Economic Data Is Mixed:

Before Monday’s opening bell,  US industrial production unexpectedly fell -0.2% last month which fell short of the small gain expected on Wall Street. At 10:00 AM EST, US homebuilder confidence rose in October to the highest level in four months which was a welcomed sign for the ailing housing market. The National Association of Home Builders/Wells Fargo confidence index rose to +16 which topped estimates and exceeded the prior month’s reading of 13.

Q3 Earnings Top Estimates:

Citigroup (C) jumped over +3% after the company said earnings rose +$0.07 compared to a loss of –$0.07 in the same period last year.  After Monday’s close, International Business Machines (IBM) and Apple Inc. (AAPL) are slated to release their Q3 results. Both stocks have enjoyed double digit percent gains since the September 1, 2010 follow-through day (FTD). Looking forward, twelve members of the 30-stock Dow Jones Industrial Average are scheduled to post Q3 earnings this week. Accordingly to Bloomberg.com (so far) over +75% of companies in the S&P 500 index that have reported their Q3 results, beat estimates

Market Action- Confirmed Rally Week 8:

The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

Want Better Results?
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.
Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.

How We Can Help You:

  1. We employ a discretionary long/short global macro strategy that is profitable in both bull and bear markets.
  2. Achieve better results in the market by working with an objective third party who is not an internal “yes” man.
  3. Provide you with sound buy/sell ideas in real-time
  4. Provide objective feedback on your investment ideas and market outlook
  5. Contribute profitable ideas to your investment committee
  6. All investment ideas are fully transparent, unbiased, and based on market action, not someone’s opinion.
  7. Help create uniformed structure within your organization!

Contact Us Today To See How We Can Help You!

15 Oct
Daily Market Commentary

7-Week Rally Continues!

Friday, October 15, 2010
Stock Market Commentary:

The 7-week rally continued on Wall Street as the US dollar continued to fall and gld surged to a fresh record high. Volume patterns remain healthy as the major averages continue their 7-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks.   It is also encouraging to see, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

Monday-Wednesday’ Action: Stocks Rally As Dollar Falls!

Stocks ended relatively flat on Monday as investors digested the prior week’s large move and the IMF concluded its weekend meeting. Overnight, stocks in Europe and Asia rallied after the IMF and global leaders met in Washington D.C. to discuss the global economy. Global leaders reaffirmed their support for continued global economic growth coupled with low debt. Elsewhere, the National Association for Business Economics (NABE) said its 46-member forecasting panel cut US economic growth projections for both 2010 and 2011 to just +2.6%. In May, the last time they were surveyed, their outlook was +3.2%. Remember that earnings season has begun and it is very important to protect your capital in the event of an adverse reaction to earnings.
On Tuesday, stocks opened lower as the US dollar rallied and concern spread that China’s economic growth may begin to slow but the bulls showed up in the afternoon on renewed prospects of QE 2. At 2pm EST, the Federal Reserve released the minutes of their September 21 meeting. As expected, the minutes echoed the Fed’s recent rhetoric and showed that policy makers are willing to step up and defend the US economy from entering a double dip recession, if needed. The USD fell and the major averages rallied after the minutes were released. The minutes also showed that policy makers are prepared to ease monetary policy “before long” and focused on purchases of Treasuries and boosting inflation expectations as ways to add stimulus.

Wednesday- Friday’s Action- Stocks Jump On Earnings and QE2 Expectations:

On Wednesday, stocks soared after the latest round of stronger than expected earnings and economic data hit the wires. The rally began overnight when Japan reported machinery orders surged +10.1% compared to a -4.5% decline forecast. More stronger than expected economic data was released in the US when import prices fell in September, reflecting a drop in energy prices. The -0.3% decline in the import-price index topped the median forecast and followed a +0.6% gain in August. Earnings news also topped estimates with companies such as CSX Corp (CSX), Intel Inc. (INTL), and JPMorgan Chase (JPM) releasing their Q3 results. The fact that the market rallied on the news bodes well for this 7-week rally.
Stocks slid on Thursday after US producer prices rose in September for a second straight month. This was the first sign that inflation may be looming. Overnight, Singapore’s central bank decided to raise rates to combat inflation and ease restrictions on their currency. Singapore’s economy grow over +19% last quarter which makes it one of the fastest growing economies in the world! This sent the USD lower and a slew of dollar denominated assets higher. US stocks fell largely due to pressure from the highly influential banking sector. A slew of banks got smacked on Thursday as foreclosure fears spread. After Thursday’s close, Google Inc’s (GOOG) shares jumped +7% after they company reported solid Q3 results.
Friday was a relatively quiet day as investors digested the latest round of economic and earnings news. Before Friday’s open, Ben Bernanke gave a speech in Boston which signaled that he was ready for another round of quantitative easing, if needed. Meanwhile, the consumer price index (CPI) was a non event which helped allay inflation woes. However, consumer confidence edged lower which put pressure on equities. Interestingly, the USD hit a new 5-month low early Friday morning, then positively reversed which could mark the end of its steep two month decline. That said, if the dollar starts to rally here we could see the major averages pullback to logical areas of support (recent moving averages) to help consolidate their recent move.

Market Action- 7-Week Confirmed Rally:

So far, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

Want Better Results?
Our Private Advisory Services Can Help You!

Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.

Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.

How We Can Help You:

  1. We employ a discretionary long/short global macro strategy that is profitable in both bull and bear markets.
  2. Achieve better results in the market by working with an objective third party who is not an internal “yes” man.
  3. Provide you with sound buy/sell ideas in real-time
  4. Provide objective feedback on your investment ideas and market outlook
  5. Contribute profitable ideas to your investment committee
  6. All investment ideas are fully transparent, unbiased, and based on market action, not someone’s opinion.
  7. Help create uniformed structure within your organization!

Contact Us Today To See How We Can Help You!

14 Oct
Daily Market Commentary

Stocks Drift Lower On Foreclosure Woes

Thursday, October 14, 2010
Stock Market Commentary:
Stocks edged lower after the latest round of stronger than expected earnings and economic data hit the tape. Volume patterns remain healthy as the major averages continue their 7-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks.   It is also encouraging to see, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.

Singapore’s Central Bank Raises Rates, US PPI Increases, Banks Fall, & Google Jumps in After Hours:

US producer prices rose in September for a second straight month. This was the first sign that inflation may be looming. Overnight, Singapore’s central bank decided to raise rates to combat inflation and ease restrictions on their currency. Singapore’s economy grow over 19% last quarter which makes it one of the fastest growing economies in the world! This sent the USD lower and a slew of dollar denominated assets higher. US stocks fell largely due to pressure from the highly influential banking sector. A slew of banks got smacked on Thursday as foreclosure fears spread. After Thursday’s close, Google Inc’s (GOOG) shares jumped +7% after they company reported solid Q3 results.

Market Action- Confirmed Rally:

So far, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

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