22 Jan
Daily Market Commentary

46 Week Rally Ends; Market In A Correction

Friday, January 22, 2010
Market Commentary:

Stocks got smacked during this shortened holiday week as investors digested a slew of earnings and economic data. Volume was reported lighter than Thursday’s session on the Nasdaq and on the NYSE which helped the major averages avoid a distribution day. However, the fact that all the major averages are now negative for the year, negatively reversed on a weekly and monthly basis, and closed below their respective 50 DMA lines suggests the market is in a correction. Decliners trumped advancers by over a 4-to-1 ratio on the NYSE and by almost a 3-to-1 ratio on the Nasdaq exchange. There were only 4 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, sharply lower than the 15 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Week in Review Tues- Fri

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21 Jan
Daily Market Commentary

Dow Closes Below 50 DMA Line on Tepid Earnings & Economic Data

Thursday, 1.21.10
Market Commentary:

US stocks got smacked on Thursday after jobless claims rose and concern spread that China will take more aggressive steps to curb its surging economy. Volume was reported higher on the Nasdaq and on the NYSE which marked another distribution day for the major averages. The higher volume declines suggested that large institutions were aggressively selling stocks. Decliners trumped advancers by over a 3-to-1 ratio on the NYSE and by a 3-to-1 ratio on the Nasdaq exchange. There were 15 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, equal to the total of 15 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

China & Jobless Claims:

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20 Jan
Daily Market Commentary

Stocks Get Smacked on A Busy Wednesday

Wednesday, January 20, 2010
Market Commentary:

The major averages got smacked on Wednesday as investors digested the latest round of tepid earnings and economic data. Volume was reported mixed; higher on the Nasdaq and lower on the NYSE. The higher volume decline on the Nasdaq marked a distribution day for that exchange and suggested that large institutions are aggressively selling stocks. However, the lower volume on the NYSE helped that exchange avoid the same fate. Decliners trumped advancers by nearly a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. There were 15 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 total of 26 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Earnings Data: IBM, Bank of America, Morgan Stanley, and Coach

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19 Jan
Daily Market Commentary

Strong Open After MLK Weekend

Tuesday, January 19, 2010
Market Commentary:

The major averages jumped on Tuesday as traders returned from a long holiday weekend. As expected, volume was reported lower than Friday’s heavy options expiration levels on the NYSE and on the Nasdaq exchange. Lower volume behind today’a gains suggests that large institutions were not aggressively buying stocks. Advancers trumped decliners by over a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. There were 26 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 total of 15 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Politics & Healthcare

In recent months we have seen stocks jump on the first trading day of the week before the bulls get tired and stocks fade ahead of the weekend. Will this time be different? Only time will tell. In other news, healthcare companies were among the biggest gainers as US Democrats face the possibility of losing a Senate seat held by the late Edward Kennedy as voters go to the polls in Massachusetts. If the Dems loss the election, it could cost them a 60-vote supermajority needed to help pass Obama’s massive health-care package.

Earnings Corner:

Companies continue reporting earnings in droves this week as there will be approximately 65 companies in the S&P 500 that are slated to release earnings by Friday. So far, earnings have been strong but the major averages have barely budged. Analysts believe that earnings surged +67% last quarter. If that occurs, it would snap a nine quarter losing streak, which is the longest in US history. Remember that since the March low, the benchmark S&P 500 is up +70% which is the single largest stock market rally since the Great Depression! The robust rally sent the index’s price-earnings multiple (a.k.a P/E ratio) to 25 last week from 10.1 in March, which was the lowest reading in a quarter century.

Market Action: Uptrend Intact

For the most part, the major averages and leading stocks are acting well as investors continue to digest the slew of economic and earnings data being released each day. Until a clear picture can be formed as to how companies fared last quarter, one could easily expect to see more of this sideways action to continue. The market just began its 46th week since the March lows and the rally remains intact as long as the major averages continue trading above their respective 50-day moving average (DMA) lines.
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15 Jan
Daily Market Commentary

Earnings Season Begins Stocks; Stocks Fall

Friday, January 15, 2010
Market Commentary:

It was disconcerting to see all the major averages negatively reverse on heavier volume than the previous week as investors digested a slew of economic and earnings related data. The heavier volume reversal for the major averages suggests that large institutions were aggressively selling, not buying, stocks. However, it was encouraging to see new 52-week highs still solidly outnumber new 52-week lows on the NYSE and on the Nasdaq exchange which is a welcomed sign.

Monday & Tuesday:

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14 Jan
Daily Market Commentary

Stocks Rally On Disconcerting Economic Data

Thursday, January, 14, 2010
Market Commentary:

Stocks edged higher after weaker than expected economic data was released. Volume was reported slightly higher than the prior session’s totals on the NYSE and about even on the Nasdaq exchange, which suggested large institutions were buying stocks. Advancers led decliners by nearly a 11-to-8 ratio on the NYSE and by a 16-to-11 ratio on the Nasdaq exchange. There were 28 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 total of 20 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.
ECB, Jobless Claims & Retail Sales:

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13 Jan
Daily Market Commentary

Stocks Bounce On A Busy Wednesday

Wednesday, January 13, 2010

Market Commentary:

After a tough start to the week, stocks closed higher on Wednesday as earnings optimism and a slew of analyst upgrades helped offset the pessimism. Volume, an important indicator of institutional sponsorship, was reported lower than Tuesday’s totals on the NYSE and on the Nasdaq exchange, which suggested large institutions were aggressively buying stocks. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by a 2-to-1 ratio on the Nasdaq exchange. There were 20 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 total of 12 issues that appeared on the prior session. New 52-week highs still solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Bankers On Capital Hill; The Financial Crisis Inquiry Commission Begins Investigating (FCIC)

Stocks traded between positive and negative territory on Wednesday before the bulls showed up and sent stocks higher in the afternoon. Several of Wall Street’s top bankers spent the morning testifying on Capital Hill about the 2007-2009 financial crisis. The bankers, whose companies collectively received more than $100 billion in government aid, spent hours explaining what happened during the crisis. The Financial Crisis Inquiry Commission was formed to examine and learn what went wrong during that period.

Google May Leave China:

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12 Jan
Daily Market Commentary

Earnings Season Begins; Stocks Fall

Tuesday, January 12, 2010
Market Commentary:

All the major averages fell for the first time this year after a disappointing start to earnings season. Volume, an important indicator of institutional sponsorship, was reported higher than Monday’s totals on the NYSE and on the Nasdaq exchange which marked a distribution day and suggested large institutions were aggressively selling stocks. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and Nasdaq exchange. There were only 12 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 total of 55 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows were near single digits which is a healthy sign.
China Raises Reserve Limits:

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11 Jan
Daily Market Commentary

Earnings Season Begins; Stocks End Mixed

Monday January 11, 2010
Market Commentary:

The major averages closed mixed after China reported record imports and earnings season officially began. Volume, an important indicator of institutional sponsorship, was reported slightly lower than Friday’s totals on the NYSE and was about even to slightly higher on the Nasdaq exchange which indicated large institutions were not aggressively buying or selling stocks. Advancers led decliners by a 23-to-15 ratio on the NYSE and were about even on the Nasdaq exchange. There were 55 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 total of 30 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows on the Nasdaq were again near the single digits which is a healthy sign.

China’s Economy Is Strong!

Before Monday’s opening bell, China said both imports and exports rose compared to last year’s levels. Exports rose +17.7% from the same period last year which was the first increase in 14 months and imports surged +55.9% to a record high! The fact that exports rose, signals that the global economy continues to recover. However, the real news is that Chinese imports surged to a fresh all-time high which supports the notion that China is emerging as a formidable economic player in the 21st Century! It is important to note that there are over 1.3 billion people in China which means that if only 30% of their population gets “wealthier” over the next few years that roughly equals the entire population of the United States! As we can see, the robust growth in China (and Asia as a whole) can, and does, have a tremendous impact on the global economy.

Earnings Season Starts!

After Monday’s closing bell, Alcoa Inc. (AA +2.53%) officially kicked off earnings season when the company reported fourth-quarter profit excluding some items of 1 cent a share. This missed the Street’s estimate of 6 cents but it was encouraging to see that sales topped estimates. Traditionally, Alcoa is the first company in the Dow Jones Industrial Average to report their quarterly results which officially kicks off earnings season. Over the next few weeks, investors will be closely watching earnings for a better gauge of how companies fared in the final quarter of the decade.

Market Action: Uptrend Extended

After three strong weeks, the market appears to be showing signs that a near term pullback might be in the cards. A slew of stocks negatively reversed (opened higher and closed lower) on Monday which suggests a near term change in trend may unfold. However, for the most part, the major averages and leading stocks are still acting strong which means they deserve the bullish benefit of the doubt until support, in this case their respective 50 DMA lines, is violated. Keep in mind, that the current rally began its 45th week (since the March 12, 2009 follow-through day) and still looks strong. In addition, most bull markets last for approximately 36 months, so the fact that we are beginning our 10th month suggests we have more room to go.
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08 Jan
Daily Market Commentary

Week 1 of 2010; Stocks Rally

Friday, January 8, 2010 Market Commentary:

Investors digested a slew of economic data and sent stocks higher during the first week of 2010. Volume, an important indicator of institutional sponsorship, was reported slightly lower than Thursday’s totals which indicated large institutions were not aggressively buying or selling stocks. Advancers led decliners by a 23-to-15 ratio on the NYSE and by a 17-to-10 ratio on the Nasdaq exchange. There were 30 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 total of 32 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange, and new lows were again in the single digits which is a very healthy sign.

Monday:

Monday was the first trading day of 2010 and stocks opened with a bang as the US dollar fell and healthy manufacturing data was released from the US and China. Before Monday’s opening bell, China announced stronger than expected manufacturing data which sparked a broad based rally in overseas markets. Manufacturing in China grew by the strongest level since April 2004 which helped allay concerns that the global economic recovery was waning. It is important to note that China was one of the first countries to recover from the first global recession since World War II. The buying continued in the US when the Institute for Supply Management’s (ISM) factory gauge rose to 55.9. The report topped estimates and was the highest level in more than three years, which suggests the US manufacturing sector is definitely in recovery mode.

Tuesday:

On Tuesday, stocks ended mixed as investors digested two important economic data points: factory orders and pending home sales. First, the good news, the Commerce Department said that factory orders in November rose +1.1% which more than doubled the Street’s estimate for a +0.4% increase. Then, the National Association of Realtors said pending home sales plunged -16% in November, which was the lowest reading since June and fell short of the Street’s lowest estimate.

Wednesday:

Stocks ended mixed on Wednesday after a private report from ADP showed employers cut more jobs than expected last month and some Federal Reserve officials said they are willing to entertain the notion of more stimulus measures in 2010. Before Wednesday’s opening bell, ADP Employer Services Inc., the country’s largest private payrolls firm, said US employers slashed -84,000 jobs in December which fell short of the Street’s estimate of -75,000. Elsewhere, the Institute for Supply Management (ISM) released a weaker than expected report on the service sector. Its non-manufacturing business index rose to 50.1, from 48.7 in the prior month. The reading topped the boom/bust level of 50 which shows growth but fell short of the 50.5 consensus. At 2:00PM EST, the Federal Open Market Committee (FOMC) released the minutes of its last meeting in 2009. The minutes for the December 15-16 FOMC meeting showed that several Fed officials are open to the notion of further stimulus measures, if needed, in 2010.

Thursday & Friday:

For a third consecutive session, stocks ended mixed on Thursday as investors digested mixed economic data: positive retail sales data and a modestly negative weekly jobless claims report. Finally, at 8:30AM EST on Friday, the Labor Department released December’s much anticipated jobs report. The report showed that U.S. employers slashed -85,000 jobs last month which fell short of the Street’s unchanged estimate. Meanwhile, the unemployment rate held steady at -10% which is near a 26-year high. However, November’s reading was revised to show a gain of 4,000 which was the first time US employers added jobs in nearly two years. It is important to note that since the recession began, the U.S. has lost –7.2 million jobs which is the largest on a percentage basis of all jobs since World War II ended in 1944-45.

Market Action- Price & Volume Remain Strong

After all was said and done, stocks remain strong as investors digested the latest round of economic data. The benchmark S&P 500, Dow Jones Industrial Average, NYSE, Nasdaq, mid-cap S&P 400, small-cap Russell 2000 and small-cap S&P 600 indices all enjoyed fresh recovery closing highs in the first week of 2010. The current rally ended its 44th week (since the March 12, 2009 follow-through day) and on all accounts still looks very strong. In addition, most bull markets last for approximately 36 months, so the fact that we are beginning our 10th month suggests we have more room to go. Until support is broken (50 DMA lines for the major averages) this rally deserves the bullish benefit of the doubt. Trade accordingly. Professional Money Management Services –  A Complimentary Portfolio Review – Inquire today! Do you want better results? Are you looking for an edge? Do you have a difficult time separating your emotions from your buy and sell decisions? Are you ready for a change? Then submit your inquiry here for a complimentary portfolio review. *Accounts over $250,000.  ** Serious inquires only, please.

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