30 Aug
Daily Market Commentary

Weak Economic Data Drags Stocks Lower

Monday, August 30, 2010
Stock Market Commentary

The major averages fell and treasuries rallied after American personal income trailed estimates which sparked concern the economic recovery may be waning. Monday’s volume totals ended lower on the NYSE and the Nasdaq exchange compared to Friday’s levels which suggested that large institutions were not aggressively selling stocks. Decliners trumped advancers by a 3-to-1 ratio on the NYSE and by nearly a 4-to-1 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 19 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 21 issues that appeared on the prior session.

Tepid Economic Data Weighs On Stocks:

Before Monday’s open, the Commerce Department said disposable incomes, or the money left over after taxes, missed estimates while consumer spending rose +0.4%, matching estimates. Monday’s “miss” was the latest in a series of economic data that suggests the slowing jobs market is adversely affecting the economic recovery. Elsewhere, it was encouraging to see the M&A market remain somewhat active. Intel (INTC -2.23%), the world’s largest chip manufacturer, fell after agreeing to buy Infineon Technologies AG’s wireless unit for about $1.4 billion. Meanwhile, 3Par (PAR -1.97%) slid after HP (HPQ +1.47%) raised their bid to buy the company. 

Market Action- In  A Correction

Monday marked Day 2 of a new rally attempt which means the earliest a possible follow-through day (FTD) could emerge will be Wednesday. However, if at anytime, Friday’s lows (Day 1) are breached then the day count will be reset. The technical action in the major averages has recently been weak while the latest round of economic data has provided a poor outlook for the market and the global recovery. Currently, resistance for the the major averages are their 50-day moving average (DMA) lines, then their longer-term 200 DMA lines while support remains July’s lows. It is also disconcerting to see weakness in the financial group. Meanwhile, the action in leading stocks and fact that some high-ranked leaders are breaking out of sound bases can be considered somewhat encouraging. Still there is importance in remaining cautious until the major averages are back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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27 Aug
Daily Market Commentary

7-Week Rally Ends; Market In A Correction

Friday, August 27, 2010
Stock Market Commentary:

The seven week rally that began on the July 7, 2010 follow-through day (FTD) ended on Tuesday after the latest round of dismal economic data dragged stocks lower. For the week, stocks ended lower but near their highs after a strong advance on Friday. Friday’s volume totals ended higher on the NYSE and the Nasdaq exchange compared to Thursday’s levels which suggested that large institutions were aggressively buying stocks. Advancers trumped decliners by over a 4-to-1 ratio on the NYSE and on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 21 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 10 issues that appeared on the prior session.

Monday & Tuesday’s Action; Stocks Fall on Dismal Economic Data:

The major averages negatively reversed (opened higher but closed lower) on Monday after encountering resistance near their respective 50-day moving average (DMA) lines. Stocks slid on Tuesday after existing home sales tanked, the 10-year Treasury yield plunged to the lowest level in 17 months, and the yen rose to the highest level versus the dollar since 1995. Overnight, stocks in Asia and Europe fell after the yen jumped to a 15-year high against the dollar and Treasury rates slid to their lowest level since the March 2009 bottom. This put pressure on US futures and set the stage for a weak open. The “big” headline of the day occurred when the National Association of Realtors said existing home sales slid by -27.2% to a 3.83 million annual rate in April. The outsized decline was attributed to a high unemployment rate and slowing economic data. This was also the lowest reading in a decade and lower than the worst estimate on Wall Street.

Wednesday-Friday’s Action; Day Count Reset:

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26 Aug
Daily Market Commentary

Stocks Fall On Renewed EU Debt Woes

Thursday, August 26, 2010
Stock Market Commentary:

The major averages traded between positive and negative territory but closed lower after jobless claims fell and concern about Spain’s fiscal stability weighed on the market. Volume reported on the NYSE and the Nasdaq exchange fell on Thursday compared to Wednesday’s levels which suggested that large institutions were not aggressively selling stocks. Decliners led advancers by approximately a 2-to-1 ratio on the NYSE and on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 10 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher from the 6 issues that appeared on the prior session.

Jobless Claims Help But Spain’s Ruling Hurts Stocks:

Before Thursday’s open, the Labor Department said applications for jobless benefits slid by 31,000, more than forecast. The report helped allay concern that American employers are not aggressively cutting jobs as the economy slows. The report showed that jobless claims slid to –473,000 in the week ended August 21, 2010. However, shares came under pressure after a Spanish court voided 5.1 billion euros ($6.48 billion) in value- added tax collected in recent years. The move caught many people off guard and sparked concern that the ruling may reignite the European debt crisis. Elsewhere, Fed Chairman Ben Bernanke is scheduled to discuss the Fed’s outlook on the economy at Friday’s annual symposium in Jackson Hole, Wyoming.

Market Action- In  A Correction:

Thursday marked Day 2 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows (Day 1) are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see weakness in the financial group while action in leading stocks has been questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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25 Aug
Daily Market Commentary

Day 1 Of A New Rally Attempt

Monday, August 25 ,2010
Stock Market Commentary:

The major averages ended higher which marked Day 1 of a new rally attempt as the market snapped a four day losing streak. Volume reported on the NYSE and the Nasdaq exchange fell on Wednesday compared to Tuesday’s levels which suggested large institutions were not aggressively buying stocks. Advancers led decliners by over a 4-to-3 ratio on the NYSE and by over an 8-to-5 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week highs on the NYSE but trailed on the Nasdaq exchange. There were 6 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, the same number that appeared on the prior session.

New Home Sales & Durable Goods Orders Are Weak:

Stocks opened lower after new home sales plunged to a record low and durable goods orders fell short of analyst estimates. The Commerce Department said new home sales unexpectedly slid last month to the lowest level on record which suggests the housing market remains very weak. Sales fell -12% from June to an annual pace of 276,000, the lowest level since data began in 1963! The report also showed that the median home price fell to $204,000 which was the lowest reading since late 2003. Meanwhile, durable goods orders, which are goods that are made to last at least three years, rose less than forecast in July. Durable goods orders rose +0.3%, which fell short of the +3% gain analysts had expected. Excluding transportation equipment, demand unexpectedly plunged -3.8% which is the largest monthly decline since January 2009 and lower than the Street’s forecast for a +0.5% increase.

Market Action- In  A Correction:

Wednesday marked Day 1 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Monday’s negatively reversal coupled with Tuesday’s ugly distribution day effectively ended the latest rally attempt. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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24 Aug
Daily Market Commentary

Stocks Dive On Tepid Housing Data

Tuesday, August 24, 2010
Stock Market Commentary:

The major averages ended in the red after existing home sales tanked, the 10-year Treasury yield plunged to the lowest level in 17 months, and the yen rose to the highest level versus the dollar since 1995! Volume reported on the NYSE and the Nasdaq exchange rose on Tuesday compared to Monday’s levels which marked the latest distribution day and effectively ended the current rally attempt. Decliners led advancers by over a 3-to-1 ratio on the NYSE and by almost a 3-to-1 ratio on the Nasdaq exchange. New 52-week lows were about even with new 52-week highs on the NYSE but trailed by a large margin on the Nasdaq exchange. There were only 6 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, much lower than the 25 issues that appeared on the prior session.

Stocks Tank on Tepid Housing Data:

Overnight, stocks in Asia and Europe fell after the yen jumped to a 15- year high against the dollar and Treasury rates slid to their lowest level since the March 2009 bottom. This put pressure on US futures and set the stage for a weak open. The “big” headline of the day occurred when the National Association of Realtors said existing home sales slid by -27.2% to a 3.83 million annual rate in April. The outsized decline was attributed to a high unemployment rate and slowing economic data. This was also the lowest reading in a decade and lower than the worst estimate on Wall Street.

Market Action- In A Correction:

The technical action in the major averages continues to weaken alongside the latest round of tepid economic data. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases.
From our perspective, Monday’s negatively reversal coupled with Tuesday’s ugly distribution day effectively ended the latest rally attempt which emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support (recent chart lows). The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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23 Aug
Daily Market Commentary

Stocks Negatively Reverse At 50 DMA Line

Monday, August 23, 2010
Stock Market Commentary:

The major averages negatively reversed (opened higher but closed lower) on Monday after encountering resistance near their respective 50 DMA lines. Volume reported on the NYSE and the Nasdaq exchange fell on Monday compared to Friday’s levels which was a somewhat welcoming sign. Decliners led advancers by almost a 2-to-1 ratio on the NYSE and by almost a 3-to-1 ratio on the Nasdaq exchange. New 52-week lows outnumbered new 52-week highs on the NYSE but trailed on the Nasdaq exchange. There were 25 high-ranked companies from the CANSLIM.net Leaders List 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.

50 DMA line Is Resistance:

Stocks opened higher but turned lower (negatively reversed) after encountering resistance near their respective 50 DMA lines. From a technical perspective, this is not healthy action. Not only are the major averages below their respective downward sloping 50 DMA lines, their 50 DMA lines, are still below their longer term 200 DMA lines. This ominous pattern is known as a “death cross” and usually suggests lower, not higher prices, will follow. Later this week, the latest read on the ailing housing market will be released: existing home sales and new home sales. This should give investors the latest look into this troubled sector.

Market Action- Rally Under Pressure:

The technical action in the major averages continues to weaken. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Monday’s negatively reversal emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support (recent chart lows). The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.

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20 Aug
Daily Market Commentary

Stocks Fall As Economy Weakens

Friday, August 20, 2010
Stock Market Commentary:

For the week, the Dow Jones Industrial Average and the benchmark S&P 500 index fell, the Nasdaq composite ended with a modest gain, as investors digested a flurry of M&A activity and the latest round of lackluster economic data. Volume totals on Friday fell compared to Thursday’s levels as the major averages ended mixed. Decliners led advancers by a 23-to-15 ratio on the NYSE and by a small margin on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were only 9 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 10 issues that appeared on the prior session.

Monday-Wednesday’s Action- Stocks Move Sideays As M&A Activity Increases:

Stocks traded in a tight range on Monday as investors digested weaker than expected economic data from Japan and the US. Japan said its economy slowed sharply last quarter with GDP missing forecasts. Japan’s economy grew by +0.4% on an annualized basis which was less than the Street’s estimate. Stocks slid after a weaker-than-expected report from New York manufacturing was released. The major averages rallied on Tuesday as the latest round of earnings topped estimates and a flurry of mergers and acquisitions (M&A) were announced. The “big” news came when an Australian firm made an unsolicited takeover bid of $39 billion for Potash Corp. of Saskatchewan Inc. (POT +0.56%). Potash Corp., the world’s largest fertilizer producer, rejected the unsolicited bid from BHP Billiton Ltd. (BHP +0.13%) as too low, but the news helped lift other fertilizer firms’ shares. 
The major averages ended slightly higher on Wednesday as investors looked past lackluster earnings and retail sales. The major averages opened lower after retail sales and the latest round of corporate earnings failed to impress analysts’ lofty expectations. However, stocks rallied after speculation spread that the M&A market will heat up which is a net positive for equities and the economy. In other news, General Motors filed for its initial public offering (IPO) under the ticker symbol: GM.

Thursday & Friday’s Action: Stocks Tank On Tepid Economic Data:

Stocks got smacked on Thursday as investors digested a series of dismal economic data: initial jobless claims unexpectedly rose, while both leading economic indicators and the Philly Fed’s general economic index fell. The Labor Department said that applications for unemployment benefits in the US jumped to the highest level since November 2009 last week which indicated that more employers are slashing jobs as the economy slows. Initial jobless claims rose by 12,000 to 500,000 in the week ended Aug. 14 and topped the Street’s estimate of 478,000. Meanwhile, the Philadelphia Federal Reserve’s general economic index fell to -7.7 which was below analysts’ estimates and led many to question the health of the economic recovery. In other news, Intel (INTC +0.05%) announced plans to buy McAfee (MFE +0.04%) for $7.68 billion. So far, global M&A business has topped $1.22 trillion in 2010 which is +17% higher than the same time last year, according to Bloomberg. The increase in M&A business bodes well for the ongoing economic recovery. Stocks ended mixed on Friday, rebounding from a very weak open.

Market Action- Rally Under Pressure:

The technical action in the major averages continues to weaken. Currently, resistance for the Dow Jones Industrial Average and the benchmark S&P 500 index is their respective 200 DMA lines, while the Nasdaq Composite faces resistance at its 50 DMA line. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Thursday’s action wiped out the gains enjoyed earlier in the week for the major averages which emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support (recent chart lows). The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.

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19 Aug
Daily Market Commentary

Stocks Fall On Sour Economic Data

Thursday, August 19, 2010
Stock Market Commentary:

The major averagers fell on Thursday after weaker-than-expected economic data which suggests the economy may be slowing. Volume totals were reported higher on both major exchanges versus the prior session, which marked the latest distribution day for the the major averages. Advancers led decliners by over a 3-to-1 ratio on the NYSE and by over a 4-to-1 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were ony 10 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 26 issues that appeared on the prior session.

Sour Economic Data Hurts Stocks:

Stocks opened lower after after initial jobless claims unexpectedly rose, leading economic indicators and the Philly Fed’s general economic index both fell. The Labor Department said that applications for unemployment benefits in the US jumped to the highest level since November 2009 last week which indicated that more employers are slashing jobs as the economy slows. Initial jobless claims rose by 12,000 to 500,000 in the week ended Aug. 14 and topped the Street’s estimate of 478,000. Meanwhile, the Philadelphia Federal Reserve’s general economic index fell to -7.7 which was below analysts’ estimates and led many to question the health of the economic recovery. In other news, Intel (INTC -3.52%) announced plans to buy McAfee (MFE +57.05%) for $7.68 billion.

Market Action- Rally Under Pressure:

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18 Aug
Daily Market Commentary

Stocks Edge Higher On Healthy M&A Outlook

Wednesday, August 8, 2010
Stock Market Commentary:

The major averages ended with modest gains as investors looked past lackluster earnings and retail sales. Volume totals on were reported lower on both major exchanges versus the prior session, which was a sign that institutional investors were not aggressively buying shares. Advancers led decliners by over an 11-to-8 ratio on the NYSE and were about even on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 26 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, one more than the 25 issues that appeared on the prior session.

Stocks Rally Despite Weak Retail Sales and Earnings Data:

The major averages opened lower after retail sales and the latest round of corporate earnings failed to impress analysts’ lofty expectations. Deere & Company (DE -1.86%) and Target Corporation (TGT +2.51%) ended lower which put initial pressure on equities. However, stocks rallied after speculation spread that the M&A market will heat up which is a net positive for equities and the economy. In other news, General Motors filed for its initial public offering (IPO) under the ticker symbol: GM.

Market Action- Rally Under Pressure:

It is disconcerting to see the action in several leading stocks remain questionable at best evidenced by the dearth of high ranked leaders breaking out of sound bases. In addition, The technical action in the major averages is not ideal. Currently, resistance for the Dow Jones Industrial Average and the benchmark S&P 500 index is their respective 200 DMA lines, while the Nasdaq composite faces resistance at its 50 DMA line. Wednesday’s action does not change our cautious outlook. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support (recent chart lows). The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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17 Aug
Daily Market Commentary

Flurry of M&A News Lifts Stocks

Tuesday, August 17, 2010
Stock Market Commentary:

The major averages rallied after after the latest round of earnings topped estimates and a flurry of mergers and acquisitions (M&A) were announced. Volume totals on were reported higher on both major exchanges versus the prior session, which was a sign that institutional investors were buying shares. Advancers trumped decliners by over a 3-to-1 ratio on the NYSE and Nasdaq exchange as the major averages closed in the middle of their daily range. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 25 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, up from the 11 issues that appeared on the prior session.

Flurry of M&A News Lifts Stocks:

The market opened higher after a flurry of mergers and acquisition news was announced. The “big” news came when an Australian firm made an unsolicited takeover bid of $39 billion for Potash Corp. of Saskatchewan Inc. (POT +27.66%). Potash Corp., the world’s largest fertilizer producer, rejected the unsolicited bid from BHP Billiton Ltd. as too low, but the news helped lift other fertilizers. So far, global M&A business has topped $1.22 trillion in 2010 which is +17% higher than the same period last year, according to Bloomberg. The increase in M&A business bodes well for the ongoing economic recovery.

Investor Confidence In Germany Still Low:

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