02 Aug
Daily Market Commentary

Economic Data Tops Estimates; Stocks Rally

Monday, August 2, 2010
Stock Market Commentary:

Stocks surged around the world after stronger-than-expected manufacturing surveys in Europe and the US helped allay concern that the global recovery is in jeopardy. Volume totals were mixed slightly higher on the NYSE and lower on the Nasdaq exchange which was not ideal. Normally, one would like to see volume expand as the market advances and contract when the market declines. Advancers trumped decliners on the NYSE by a 5-to-1 ratio and over a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and the Nasdaq exchange.  There were 56 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, much higher than the 19 issues that appeared on the prior session.

Economic Data Tops Estimates:

The Institute for Supply Management’s (ISM) manufacturing index slid to 55.5 in July from 56.2 a month earlier but topped estimates (54.5) and was above the critical boom/bust level of 50. Elsewhere, the Commerce Department said US construction spending unexpectedly grew +0.1% in June which also topped estimates (a decline of -0.5%). It was also encouraging to see the euro rally to a three month high against the greenback which helped lift a slew of dollar denominated assets (mainly, stocks and commodities).

Market Action- Confirmed Rally:

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30 Jul
Daily Market Commentary

Week in Review: Stocks End Flat After Hitting Resistance

Friday, July 30, 2010
Stock Market Commentary:

For the week, the major averages ended mixed to slightly lower as investors digested a slew of economic and earnings data. On Friday, volume, an important indicator of institutional sponsorship, was lower than Thursday’s session on both major exchanges. Advancers led decliners by a 22-to-15 ratio on the NYSE and by a 5-to-4 ratio on the Nasdaq exchange.  New 52-week highs outnumbered new 52-week lows on the NYSE and the Nasdaq exchange.  There were 19 high-ranked companies from the CANSLIM.net Leaders List that 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.

Monday-Wednesday’s Action: Stocks Stall Near Prior Chart Highs:

Stocks opened higher on Monday after FedEx Corp (FDX) reported solid results and raised its 2010 outlook. Before Monday’s open, FedEx raised their 2010 outlook and said earnings soared +108% while sales grew by +20% last quarter. The second largest package-delivery company’s shares gapped up on monstrous trade as investors welcomed the positive news. Normally, transportation stocks are a good proxy for general economic activity. Elsewhere, the Commerce Department said new home sales topped estimates and rose in June, following an unprecedented decline in the previous month. New home sales rose by +24% from May to an annual pace of 330,000. Stocks ended mixed to slightly lower on Tuesday after the S&P Case-Shiller home-price index showed home prices across the US rose in May due to “seasonal factors and the residual impact of the now-expired first-time home buyers’ tax credit.”
The major averages ended lower on Wednesday after encountering resistance near their recent chart highs. The Commerce Department said durable goods unexpectedly fell last month. At 2:00PM EST, the Fed published its Beige Book which summarizes economic conditions at 12 districts around the country. The report showed that the economic recovery slowed in some districts while other districts held steady.

Thursday & Friday’s Action- Stocks Fall on Lackluster Economic Data:

The major averages negatively reversed on Thursday after encountering resistance near their prior chart highs and their 50% retracment from their April 2010’s high. Technology and financial shares fell after the latest of earnings reports were released and New York Attorney General Andrew Cuomo began a fraud probe into the life insurance industry and subpoenaed several well-known firms.
Elsewhere, the Labor Department said jobless claims fell last week and confidence improved about Europe’s economy. Stocks turned tail after James Bullard, President of the Federal Reserve Bank of St. Louis, said the central bank should resume purchases of Treasury securities if the economy slows and deflation sets in. On Friday, stocks ended mixed to slightly higher after GDP slowed in the second quarter and the latest read on consumer confidence topped estimates.

Market Action- Confirmed Rally:

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29 Jul
Daily Market Commentary

Stocks Negatively Reverse From Resistance

Thursday, July 29, 2010
Stock Market Commentary:

The major averages negatively reversed after encountering resistance near their prior chart highs. Volume, an important indicator of institutional sponsorship, was higher than Wednesday’s session which marked a distribution day for the NYSE and the Nasdaq exchange. Advancers led decliners by a 20-to-17 ratio on the NYSE and were about even on the Nasdaq exchange.  New 52-week highs outnumbered new 52-week lows on the NYSE and the Nasdaq exchange.  There were 21 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 14 issues that appeared on the prior session.

Stocks End Lower As Deflation Fears Arise:

Several high profile technology stocks got smacked after Akamai Technologies Inc. (AKAM -12.90%), Nvidia (NVDA -9.87%), and Symantec Corp. (SYMC -11.18%) released weak Q2 results. Financial shares fell after New York Attorney General Andrew Cuomo began a fraud probe into the life insurance industry and subpoenaed several well-known firms.
Elsewhere, the Labor Department said jobless claims fell last week and confidence improved about Europe’s economy. Stocks turned tail after James Bullard, President of the Federal Reserve Bank of St. Louis, said the central bank should resume purchases of Treasury securities if the economy slows and deflation sets in. On Friday, the US government is slated to release Q2 GDP figures which will give investors the latest read on the economy.

Market Action- Confirmed Rally:

The major averages are still above their respective 2-month downward trendlines which is a healthy sign. However the Nasdaq Composite, NYSE Composite, and the benchmark S&P 500 index all closed below their respective 200-day moving average (DMA) lines which is not ideal. In order for a new leg higher to begin, the major averages will have to regain their longer term averages and close above their recent chart highs which currently serves as the next level of resistance. That said, the window remains open for for high-ranked stocks to be accumulated when they trigger fresh technical buy signals. Trade accordingly.

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28 Jul
Daily Market Commentary

Stocks End Lower On Lackluster Economic Data

Wednesday, July 28, 2010
Stock Market Commentary:

The major averages fell on Wednesday after durable goods fell and the Fed Beige Book showed the economic recovery has slowed. However, it was encouraging to see volume, an important indicator of institutional sponsorship, decline on the NYSE and the Nasdaq exchange compared to Tuesday’s level. Decliners led advancers by over a 2-to-1 ratio on the NYSE and on the Nasdaq exchange while new 52-week highs outnumbered new 52-week lows on both major exchanges. There were only 14 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, down from the 59 issues that appeared on the prior session.  The recent signs of expanding leadership bode well for the current confirmed rally.

Tepid Economic Data Weighs On Stocks:

The major averages ended lower after the Commerce Department said durable goods unexpectedly fell last month. Goods that are built to last at least three years fell -1% compared to the Street’s estimate of a +1% increase. At 2:00pm EST, the Fed published its Beige Book which summarizes economic conditions at 12 districts around the country. The report showed that the economic recovery slowed in some districts while other districts held steady. Growth held steady in Cleveland and Kansas City, but slowed in Chicago and Atlanta. Other areas showed modest economic conditions. The primary culprit for the lackluster reading was high unemployment which adversely affects consumer spending, a primary driver of the US economy.

Market Action- Confirmed Rally:

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27 Jul
Daily Market Commentary

Mixed Economic Data Weighs On Stocks

Tuesday, July 27, 2010
Stock Market Commentary:

The major averages traded between positive and negative territory after the latest round of earnings and mixed economic data was released. Volume, an important indicator of institutional sponsorship, was reported mixed, higher on the NYSE and lower on the Nasdaq exchange. Decliners led advancers by a 22-to-17 ratio on the NYSE and by a 15-to-11 ratio on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on both major exchanges. There were 59 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower from the 64 issues that appeared on the prior session.  The sign of expanding leadership bodes well for the current confirmed rally.

Earnings & Mixed Economic Data Weigh On Stocks:

The major averages opened higher after DuPont (DD +3.57%) and Deutsche Bank (DB +2.84%) reported solid Q2 results.  However, the bears showed up and sent the major averages into the red after the latest round of mixed economic data was released. The S&P Case-Shiller home-price index showed home prices across the US rose in May due to “seasonal factors and the residual impact of the now-expired first-time home buyers’ tax credit.” The Case-Shiller 20-city index rose +1.3% compared to April’s reading and it rose +0.5% when adjusted for seasonal factors. It was somewhat encouraging to see the index rise +4.6% when compared to the same period last year. Elsewhere, consumer confidence plunged to a five-month low and the latest reading on US manufacturing fell short of the Street’s estimates which led many to question the health of the ongoing economic recovery.

Market Action- Confirmed Rally:

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26 Jul
Daily Market Commentary

FedEx & Healthy Housing Data Lift Stocks

Monday, July 26, 2010
Stock Market Commentary:

The major averages ended higher on Monday after FedEx Corp. (FDX) reported solid results, raised their 2010 outlook and a positive report from the troubled housing sector was released. Volume, an important indicator of institutional sponsorship, was reported lower than Friday’s totals on the NYSE and Nasdaq exchange. Advancers trumped decliners by a 3-to-1 ratio and new 52-week highs easily outnumbered new 52-week lows on both major exchanges. There were 64 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 from the 39 issues that appeared on the prior session.

FedEx, New Home Sales & Sentiment All Help Lift Stocks:

Before Monday’s open, FedEx raised their 2010 outlook and said earnings soared +108% while sales grew by +20% last quarter. The second largest package-delivery company’s shares gapped up on monstrous trade as investors welcomed the positive news. Normally, transportation stocks are a good proxy for general economic activity. Therefore, the fact that earnings soared last quater bodes well for the ongoing global recovery. 
Elsewhere, the Commerce Department said new home sales topped estimates and rose in June, following an unprecedented decline in the previous month. New home sales rose by +24% from May to an annual pace of 330,000. The market has rebounded nicely over the past few weeks after investor sentiment fell to the lowest level since July 2009. The American Association of Individual Investors’ ratio of bullish to bearish respondents fell to 0.68 (four week average) which normally corresponds with countertrend rallies. The converse is also true, market’s tend to pullback when the survey becomes too bullish.

Market Action- Confirmed Rally:

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23 Jul
Daily Market Commentary

Healthy Week On Wall St; Stocks Close Above Resistance!

Friday, July 23, 2010
Stock Market Commentary:

Stocks ended higher this week as investors digested a slew of earnings and economic data. Volume, an important indicator of institutional sponsorship, was reported slightly higher than Thursday’s totals on both exchanges while the major averages ended unanimously higher. Advancers trumped decliners by over a 3-to-1 ratio and new 52-week highs outnumbered new 52-week lows on both major exchanges. There were 39 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 from the 23 issues that appeared on the prior session.

Monday & Tuesday’s Action:

Stocks ended higher on Monday after the National Association of Home Builders/Wells Fargo confidence index slid to 14 in July which is the the lowest reading since April 2009 and down from last month’s reading of 16. Any reading below 50 means that respondents consider the current environment as poor. Over the next few weeks, it will be very interesting to see how companies fared last quarter and, equally important, to see how the market reacts to the numbers. Analysts believe that Q2 earnings for S&P 500 companies rose +34%. So far, the reaction has been positive.
Stocks rallied on Tuesday after several high profile companies released their Q2 results. Initially, stocks opened lower due to a general disappointment with their numbers but the bulls showed up in the second half of the session which was an encouraging sign. A slew of housing stocks rallied after building permits rose last month. However, housing starts, which measure new production, fell in June to their lowest level since October 2009 after the government tax incentive expired. 

Wednesday- Friday’s Action:

Stocks got hit on Wednesday after President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act while Federal Reserve Chairman Ben Bernanke testified on Capitol Hill and a slew of earnings were released. On Thursday, the major averages vaulted above their two month downward trendlines and their respective 50 DMA lines which was a very healthy sign. The large rally was sparked after healthy economic data was released from Europe. The strong economic data helped allay concerns that an economic slowdown may derail the global recovery. Stocks ended higher on Friday after the latest round of large cap earnings were released and the results of the European Stress Test were mild. 

Market Action- Confirmed Rally:

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22 Jul
Daily Market Commentary

Stocks Close Above Resistance

Thursday, July 22, 2010
Stock Market Commentary:

Stocks rallied smartly on Thursday as investors digested the latest round of earnings and economic data. Volume, an important indicator of institutional sponsorship, was reported slightly higher than Wednesday’s totals on both exchanges while the major averages ended unanimously higher. Advancers led decliners by nearly a 6-to-1 ratio on the NYSE and by nearly a 5-to-1 ratio on the Nasdaq exchange. New 52-week highs solidly outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange. There were 23 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 from the 18 issues that appeared on the prior session.  For the rally to have ongoing success it will be critical for a healthy crop of leaders to continue showing up hitting new 52-week highs.

Stocks Rally On Healthy EU Economic & U.S. Earnings Data:

It was encouraging to see stocks rally after the latest round of earnings were released. Overnight, stocks rallied after the eurozone reported stronger than expected economic growth. This helped allay concerns of an economic slowdown that may derail the global recovery. In the US, United Parcel Service Inc. (UPS +5.23%) and AT&T Inc. (T +2.27%) were some of the well-known companies that reported solid Q2 results.  The dollar fell which also helped oil top $79 a barrel and copper rally from deeply oversold levels. Copper climbed over +2% to $3.1555 a pound in New York, which was the highest level since May. Investors are not waiting for Europe to release the results of their much anticipated stress tests which are slated to be released on Friday.

Market Action- Confirmed Rally:

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21 Jul
Daily Market Commentary

Stocks Fail At Resistance- Again

Wednesday, July 21, 2010
Stock Market Commentary:

The major averages ended lower after Obama signed the Financial Regulation bill and Federal Reserve Chairman Ben Bernanke spent his afternoon testifying on Capital Hill. Volume, an important indicator of institutional sponsorship, was higher than Tuesday’s level on both exchanges. There were 23 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 from the 18 issues that appeared on the prior session. Decliners trumped advancers by nearly a 2-to-1 ratio on the NYSE and by nearly a 3-to-1 ratio on the Nasdaq exchange. New 52-week highs solidly outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange.  For the rally to have ongoing success it will be critical for a healthy crop of leaders to continue showing up hitting new 52-week highs.

FinReg Bill, Bernanke and Q2 Earnings Fail To Impress The Street:

A slew of high profile companies released their Q2 results since Tuesday’s close and nearly all of them are trading lower which suggests investors are not happy with their results. In other news, President Obama signed the FinReg bill into law today and Ben Bernanke made it clear that the Fed will continue to help the US economy recover from the worst financial crisis since the Great Depression. Bernanke also said that the economic outlook remains “unusually uncertain” without offering additional measures to stimulate growth.

Focus On Price & Volume, Not The “Noise”:

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20 Jul
Daily Market Commentary

Stocks Higher On A Slew of Earnings Data

Tuesday, July 20, 2010
Market Commentary:

The major averages erased earlier losses and ended near their intraday highs as investors digested the latest round of economic and earnings data. Volume, an important indicator of institutional sponsorship, was higher than Monday’s level on both exchanges. There were 18 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 from the 7 issues that appeared on the prior session. Advancers led decliners by over a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs solidly outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange.  For the rally to have ongoing success it will be critical for a healthy crop of leaders to continue showing up hitting new 52-week highs.

Investors Digest a Slew Of Earnings Season & Economic Data:

International Business Machines Corp. (IBM -2.50%), Texas Instruments Inc. (TXN -3.05%), Johnson & Johnson (JNJ -1.66%), and Goldman Sachs Inc (GS +2.22%) were among the high profile companies that reported earnings since Monday’s close. Initially, stocks opened lower due to a general disappointment with their numbers but the bulls showed up in the second half of the session which was an encouraging sign. A slew of housing stocks rallied after building permits rose last month. However, housing starts, which measure new production, fell in June to their lowest level since October after the government tax incentive expired.  After Tuesday’s close, Yahoo Inc. (YHOO +0.66%) and Apple Inc. (AAPL +2.57%) released their latest quarterly results. As always, it will be very interesting to see how the market reacts to their numbers.

Market Action- Rally Under Pressure:

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