Stocks Moving In Heavy Volume – Thursday 11.17.11
Heavy Volume Movers – Thursday 11.17.11
Stocks Moving In Heavy Volume
17
Nov
17
Nov
24
Oct
Resistance Should Become Support
Monday, October 24, 2011
Stock Market Commentary:
Stocks rallied on Monday as investors digested the latest round of earnings and M&A news. Stocks confirmed their latest rally attempt on Tuesday (10.18.11) day 12 of their rally attempt when the S&P 500 and NYSE composite scored proper follow-through days (FTD). It is important to note that every major rally in history began with a FTD but not every FTD leads to a new rally. That said, one can err on the bullish side as long as the major averages remain above their 50 DMA lines. The next important area of resistance is their September highs and then their 200 DMA lines. We would be remiss not to note that several key risk assets (multiple stock markets around the world, Copper, Crude Oil, etc.) officially entered bear market territory over the in recent months which bodes poorly for U.S. stocks and the global economy. However, it is “encouraging” to see U.S. stocks outperform these markets which is a sign of strength.
Another Lackluster EU Meeting, Earnings Top Estimates & M&A News Lifts Stocks!
Over the weekend, EU leaders kicked the can down the road and reschedule yet another meeting on Wednesday to tackle their onerous debt levels. Elsewhere, shares of Catepillar Inc. (CAT) gapped up after topping Q3 estimates and raised their 2012 forecasts. The news on the M&A front was healthy. Shares of RightNow Technologies (RNOW) and Healthspring Inc. (HS) gapped up after agreeing to be acquired on Monday.
Market Outlook- Confirmed Rally:
The major U.S. averages are back in a new confirmed rally and broke above resistance of their 6-week base. The benchmark S&P 500 index scored a proper FTD on Tuesday, October 18, 2011, i.e. Day 12, when it rallied over 2% on heavier volume than the prior session. The next important area of resistance is its longer term 200 DMA line. In addition, it is important to note that the bulls scored a victory since many of the major averages closed above their downward sloping 50 DMA lines for the first time since late July! Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. If you are looking for specific help navigating this market, please contact us for more information.
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FindLeadingStocks.com
26
Jun
Adam Sarhan Reuters Gold Quote
Gold slides for second day, breaks key supports
By Frank Tang
Fri, Jun 24 2011
NEW YORK (Reuters) – Gold slumped for a second day on Friday to conclude its worst week in eight, crashing through key technical supports, as investors shed riskier assets and bought the dollar on heightened concerns over Greek debt.
With less than a week until the end of the Federal Reserve’s second quantitative easing program, bullion’s three percent fall over the past two days has raised questions about whether its years-long boom has stalled. After reaching a high of $1,575.79 on May 2, gold has struggled.
Spot prices ended the week below their 50-day moving average for the first time since February, they ruptured a trendline support stemming back to a January low, and they broke out of a six-week sideways pattern to the downside.
All of those technical chart patterns were seen as warning signs by many investors.
“Once the 50-day average is broken on a weekly basis, it a first sign of weakness and that the trend may be changing,” said Adam Sarhan at Sarhan Capital.
Graphic: r.reuters.com/ruz32s
Spot gold was down 1.3 percent at $1,501.40 an ounce by 3:02 p.m. EDT (1902 GMT), having earlier fallen to a month low at $1,498.16. It was down about 2.5 percent for the week.
U.S. August gold futures settled down $19.60, a 1.30 percent drop, at $1,500.90. It set a $1,498.50 and $1,526.50 range. Volume above 170,000 lots was about 20 percent below its 30-day average, but up from weak volume in recent sessions.
The dollar gained almost 1 percent for the week versus the euro on worries that Greece’s parliament will not approve a package of austerity measures next week. The U.S. currency also strengthened after the Federal Reserve, earlier this week, offered no hope for additional monetary support.
“Gold’s decline has to do with the strength of the dollar, and since the equity market is resuming its decline, that’s what’s working counter to gold prices at the moment,” said Mark Luschini, chief investment strategist at broker-dealer Janney Montgomery Scott, which manages $54 billion in assets.
Silver was down 2 percent at $34.55 an ounce, lifting the gold/silver ratio — the number of ounces of silver needed to buy one ounce of gold — to near a one-month high at 43.5. The ratio’s increase highlights gold’s outperformance relative to silver.
TECHNICAL WEAKNESS
Rick Bensignor, chief market strategist at Dahlman Rose, said, gold’s pullback could have more room to the downside, with next major support in area of May’s lows between $1,488 and $1,471 a tonne.
“The dollar could rally up to its 200-day moving average, and that will not help gold advance right now,” he said.
Worries about Greece defaulting on its massive debt, a development that would roil markets if the country’s parliament does not approve austerity measures and concerns over some Italian banks dragged global stock markets sharply lower for a second day. <USD/> .N
“You have prices of crude oil, commodities and the stock market again under pressure. And, you have a strong dollar. To think that gold is going to rally, it’s just not going to happen,” said independent investor Dennis Gartman.
“Every market that has the term ‘risk’ associated with it, everybody wants out,” he said.
With the second round of Fed quantitative easing (QE2) ending in June, some investors question whether risk assets could rise further. Gold has thrived on the expectation of an extended period of low U.S. interest rates, and that placed non-yielding bullion in a better position to compete for investor cash against stocks or bonds.
Among platinum group metals, platinum was last down 0.8 percent at $1,680.24 an ounce, while palladium was down 1.8 percent at $729.25.
Prices at 3:02 p.m. EDT (1902 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG US gold 1500.90 -19.60 -1.3% 5.6% US silver 34.638 -0.364 1.0% 12.0% US platinum 1677.60 -16.90 -1.0% -5.7% US palladium 730.20 -11.35 -1.5% -9.1%
Gold 1501.40 -19.30 -1.3% 5.8% Silver 34.55 -0.70 -2.0% 12.0% Platinum 1680.24 -14.26 -0.8% -4.9% Palladium 729.25 -13.10 -1.8% -8.8%
Gold Fix 1514.75 -6.25 -0.4% 7.4% Silver Fix 34.73 -128.00 -3.6% 13.4% Platinum Fix 1696.00 10.00 0.6% -2.0% Palladium Fix 739.00 5.00 0.7% -6.6%
(Additional reporting by Amanda Cooper and Silvia Antonioli in London, Manolo Serapio Jr in Singapore; Editing by Carole Vaporean)
URL: http://www.reuters.com/article/2011/06/24/us-markets-precious-idUSTRE7592IU20110624
03
Jan
Commodities Outshine Stocks in 2010
December 2010
Stock Market Commentary:
The major averages surged in December and enjoyed double digit gains in 2010. Furthermore, the 18-week rally which was confirmed on the September 1, 2010 follow-through day (FTD) remains intact which is a healthy sign for 2011.
Background:
Before we address the current market outlook, it is important to step back and put the recent action in proper context. Since the March 2009 bottom, the major averages have experienced explosive gains on the simple premise that the global economic recovery will be robust. That notion helped the benchmark S&P 500 Index vault an impressive +88% as of December 31, 2010’s close. The major averages pulled back from April-August as fear spread that the robust recovery may begin to wane due to the ominous debt levels in several European nations coupled with a high rate of unemployment. The summer sell off sent the major averages down –11% to -18% from their 2010 highs before bottoming in early July. The euro, which has also enjoyed healthy gains since March 2009, topped out in December 2009 and has steadily fallen during the first half of 2010, then rallied smartly off its multi year lows in July and pulled back after in November after Ireland needed to be bailed out. Looking ahead, it is imperative to monitor the direction the euro is heading in order to better gauge investors’ world-wide collective appetite for risk.
Bullish Case: Stocks Are Strong!
History shows us that most bull markets last between 18-36 months before they fail. Therefore, the fact that we are only beginning our 23rd month bodes well for this bull market. It is also very encouraging to see nearly every government across the globe step up and unanimously infuse an unprecedented amount of capital into the global economy and more recently, reiterate their stance in recent months to infuse more capital if needed (which are now known as quantitative easing 1 and 2). This unified action saved the global economy from entering a deeper recession and laid the foundation for this massive bull run. On average, central banks around the world are still keeping rates near historic lows to help spur economic growth, while a few have begun raising rates. As of this writing, the major averages continue racing higher and managed to negate a massive head and shoulders topping pattern, breakout of a smaller inverse head and shoulders pattern, trade back above their 50 and 200 DMA lines, and take out April’s highs. As long as these levels hold, the intermediate and longer term picture remain positive. It is also healthy to see a slew of commodities surge to fresh multi year and record highs. Gold, silver, cotton, and coffee are a few well known commodities that have enjoyed robust moves recently.
It is also very encouraging to see the bulls show up and continuously defend support. Since the April 2010 highs, the major averages have pulled back a handful of times, each somewhat mild, not exceeding the -20% level which technically defines a bear market. Therefore, until the major averages pullback over -20% from their recent highs this could be interpreted as a temporary correction, albeit steep, before the bulls again return and resume this powerful uptrend that began in March 2009. A characteristic of this bull market and others is that every time the market pulls back the bulls promptly show up to quell the bearish pressure and defend support. That said, until support is breached, the bulls deserve the bullish benefit of the doubt.
Bearish Case: EU Debt & High Unemployment Rates Are Still A Concern
Sovereign debt woes and high unemployment rates continue to be the bane of this rally. Since the April 2010 highs, several popular rating agencies have downgraded a slew of European nations and financial institutions’ debt. Not surprisingly, this corresponded with a steep sell-off in the euro which sent it down to fresh 4-year low earlier this summer. Italy, Hungary, Portugal, Greece, Iceland, and Spain are some of the European nations which analysts believe are dealing with onerous debt levels. All of this helped gold and bonds race higher as the so-called “safe haven” trade. Gold prices surged to all-time highs last month as the US dollar fell.
The bears believe that the effects of the massive worldwide stimulus packages from 2008-2009 are beginning to wane and the future of the global economic recovery may not be as robust as initially expected. The bears also claim that technically this rally is done and overdue for a serious intermediate-term correction. Since the March ‘09 lows, the major averages have retraced (rallied back) a little over +60% of their 2007-2009 bear market decline, which is a fairly typical bounce before a new down leg ensues. Only time will tell exactly how this plays out.
Market Action: Price & Volume A-
As we know, the major averages topped out in October 2007 and then proceeded to precipitously plunge until they put in a near-term bottom in early March 2009. Since then, the market snapped back and enjoyed hefty gains which helped send the major averages to one of their strongest 23-month rallies in history. The small cap Russell 2000 Index was the standout winner, surging a whopping +128% and a very impressive +25% in 2010. The tech-heavy Nasdaq Composite is second, vaulting +110% since the March 2009 low and jumped 17% in 2010. The benchmark S&P 500 Index raced+88% since the March 2009 low and 13% in 2010. Meanwhile, the Dow Jones Industrial Average soared +79% and +11% in 2010. Despite these impressive gains, several commodity markets soared in 2010. Gold rose nearly 30%, Coffee and Sugar both enjoyed tremendous gains and a host of other commodities hit fresh recovery highs.
Looking forward, as long as the major averages stay above their 50 DMA line the bulls remain in control. However, if the 2010 lows are further breached, then odds will favor even lower prices will follow. Allow us to be clear: the action since the July low has been robust, very healthy, and suggests the bulls are now back in control of this market. Trade accordingly. Never argue with the tape, and always keep your losses small.
Are You Looking For Someone To Manage Your Money?
Our Private Wealth Management Services Can Help You!
Sarhan Wealth Management provides both global macro and equity only consulting services to high net worth and institutional clients around the world. For years, our 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 historical data is 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!
01
Dec
November 2010 Market Commentary
The major averages ended lower in November after encountering resistance near their April 2010 highs. Furthermore, the 12 week rally which was confirmed on the September 1, 2010 follow-through day (FTD) ended on Tuesday, November 16, 2010. This corresponded with a steep rally in the US dollar and a fresh round of European debt woes.
Background:
Before we address the current market outlook, it is important to step back and put the recent action in proper context. Since the March 2009 bottom, the major averages have experienced explosive gains on the simple premise that the global economic recovery will be robust. That notion helped the benchmark S&P 500 Index rally +83% before reaching a near-term top of 1,219 on April 26, 2010. Since then, notions of a robust recovery have come into question, especially due to the ominous debt levels in several European nations coupled with a high rate of unemployment and a slowing economic recovery in the US. The summer sell off sent the major averages down –11% to -18% from their 2010 highs before bottoming in early July. The euro, which has also enjoyed healthy gains since March 2009, topped out in December 2009 and has steadily fallen during the first half of 2010, then rallied smartly off its multi year lows in July and continued advancing last month. Looking ahead, it is imperative to monitor the direction the euro is heading in order to better gauge investors’ world-wide collective appetite for risk.
Bullish Case: Stocks Are Strong!
History shows us that most bull markets last between 18-36 months before they fail. Therefore, the fact that we are only beginning our 22nd month bodes well for this bull market. It is also somewhat encouraging to see nearly every government across the globe step up and unanimously infuse an unprecedented amount of capital into the global economy and more recently, reiterate their stance in recent months to infuse more capital if needed (which are now known as quantitative easing 1 and 2). This unified action saved the global economy from entering a deeper recession and laid the foundation for this massive bull run. On average, central banks around the world are still keeping rates near historic lows to help spur economic growth, while a few have begun raising rates. As of this writing, the major averages continue racing higher and managed to negate a massive head and shoulders topping pattern, breakout of a smaller inverse head and shoulders pattern, trade back above their 50 and 200 DMA lines, and retest April’s highs. As long as these levels hold, the intermediate and longer term picture remain somewhat positive. It is also healthy to see a slew of commodities surge to fresh multi year and record highs. Gold, silver, cotton, and coffee are a few well known commodities that have enjoyed phenomenal moves recently.
It is also very encouraging to see the bulls show up and continuously defend support. Since the April 2010 highs, the major averages have pulled back a handful of times, each somewhat mild, not exceeding the -20% level which technically defines a bear market. Therefore, until the major averages pullback over -20% from their recent highs this could be interpreted as a temporary correction, albeit a steep one, before the bulls again return and resume this powerful uptrend that began in March 2009. A characteristic of this bull market and others is that every time the market pulls back the bulls promptly show up to quell the bearish pressure and defend support. That said, until support is breached, the bulls deserve the bullish benefit of the doubt.
Bearish Case: EU Debt, Tepid Economic Growth, & Unemployment Are Still A Concern
Sovereign debt woes and tepid economic growth continue to be the bane of this rally. Since the April 2010 highs, several popular rating agencies have downgraded a slew of European nations and financial institutions’ debt. Not surprisingly, this corresponded with a steep sell-off in the euro which sent it down to fresh 4-year low earlier this summer. Italy, Hungary, Portugal, Greece, Iceland, and Spain are some of the European nations which analysts believe are dealing with onerous debt levels. All of this helped gold and bonds race higher as the so-called “safe haven” trade. Gold prices surged to all-time highs last month as the US dollar fell.
The bears believe that the effects of the massive worldwide stimulus packages from 2008-2009 are beginning to wane and the future of the global economic recovery may not be as robust as initially expected. The bears also claim that technically this rally is done and overdue for a serious intermediate-term correction. Since the March ‘09 lows, the major averages have retraced (rallied back) a little over +50% of their 2007-2009 bear market decline, which is a fairly typical bounce before a new down leg ensues. Only time will tell exactly how this plays out.
Market Action: Price & Volume B+
As we know, the major averages topped out in October 2007 and then proceeded to precipitously plunge until they put in a near-term bottom in early March 2009. Since then, the market snapped back and enjoyed hefty gains which helped send the major averages to one of their strongest 18-month rallies in history. The small cap Russell 2000 Index was the standout winner, surging a whopping +117%. The tech-heavy Nasdaq Composite is a close second, having vaulted +100%before reaching its interim high of 2,535 on April 26, 2010. The benchmark S&P 500 Index raced+83% higher before hitting its near term high of 1,219 on April 26, 2010, and the Dow Jones Industrial Average soared +74% before printing its near-term high of 11,258 on April 26, 2010.
This data indicates that Monday, April 26, 2010 appeared to be a very important day for the market because that is the day that most of the popular averages printed their near-term highs and negatively reversed by closing lower from new recovery highs. In addition, after such hefty moves, the 11-18% pullback was healthy enough to help shake out the weak hands and send the major averages higher last month. However, if the 2010 lows are further breached, then odds will favor that even lower prices will follow. Allow us to be clear: the action since the July low has been robust, very healthy, and suggests the bulls are now back in control of this market. Trade accordingly. Never argue with the tape, and always keep your losses small.
Are You Looking For Someone To Manage Your Money?
Our Private Wealth Management Services Can Help You!
Sarhan Wealth Management provides both global macro and equity only consulting services to high net worth and institutional clients around the world. For years, our 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 historical data is 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!
01
Nov
Negative Reversal From Resistance; Stocks Give Back Earlier Gains
Monday, November 1, 2010
Stock Market Commentary:
Stocks opened higher after Chinese manufacturing data surged to a 6-month high and US mfg data jumped to a 5-month high. However, the bears showed up and stocks lower after the US Dollar rallied and Irish bond yields jumped to the highest on record. Volume patterns remain healthy as the major averages have now begun their 10th 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.
Manufacturing Data and Spending Solid; Income Light
Overnight, Chinese manufacturing soared to a 6-month high which sent the dollar lower and a slew of commodities higher (oil, copper, etc.) on hopes of increasing demand. Meanwhile, US manufacturing jumped to a 5-month high which also bodes well for the demand side of the equation. Consumer spending rose while incomes fell to a 14-month low. US stocks negatively reversed today after hitting another 5 month high. This reiterates our cautious stance and suggests the bulls are getting tired after a 10-week robust rally. Again, caution is paramount during this busy headline driven week.
Market Action- Confirmed Rally, Week 10:
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 over the past two weeks, the tape remains somewhat sloppy. Trade accordingly.
30
Oct
October 2010 Market Commentary: Stocks & Commodities Up; Dollar Falls
October 2010 Market Commentary:
The major market indexes have enjoyed large gains since they scored a sound follow-through day (FTD) on September 1, 2010. This corresponded with a steep sell off in the US dollar and a robust rally in many well-known commodities. The benchmark S&P 500 index and the Dow Jones Industrial Average both soared last month and enjoyed their best September since 1939, rallying +3.6% and 3%, respectively. The tech-heavy Nasdaq composite led its peers, surging +5.8% last month. For the year, the Dow Jones Industrial Average and the S&P 500 index are both up over +6%, while the Nasdaq Composite is leading the major averages with a +10.4% gain.
Background:
Before we address the current market outlook, it is important to step back and put the recent action in proper context. Since the March 2009 bottom, the major averages have experienced explosive gains on the simple premise that the global economic recovery will be robust. That notion helped the benchmark S&P 500 Index rally +83% before reaching a near-term top of 1,219 on April 26, 2010. Since then, notions of a robust recovery have come into question, especially due to the ominous debt levels in several European nations coupled with a high rate of unemployment and a slowing economic recovery in the US. The summer sell off sent the major averages down –11% to -18% from their 2010 highs before bottoming in early July. The euro, which has also enjoyed healthy gains since March 2009, topped out in December 2009 and has steadily fallen during the first half of 2010, then rallied smartly off its multi year lows in July and continued advancing last month. Looking ahead, it is imperative to monitor the direction the euro is heading in order to better gauge investors’ world-wide collective appetite for risk.
Bullish Case: Stocks Are Strong!
History shows us that most bull markets last between 18-36 months before they fail. Therefore, the fact that we are only beginning our 19th month bodes well for this bull market. It is also somewhat encouraging to see nearly every government across the globe step up and unanimously infuse an unprecedented amount of capital into the global economy and more recently, reiterate their stance in recent months to infuse more capital if needed (which are now known as quantitative easing 1 and 2). This unified action saved the global economy from entering a deeper recession and laid the foundation for this massive bull run. On average, central banks around the world are still keeping rates near historic lows to help spur economic growth, while a few have begun raising rates. As of this writing, the major averages continue are racing higher and managed to negate a massive head and shoulders topping pattern, breakout of a smaller inverse head and shoulders pattern, and trade back above their 50 and 200 DMA lines. As long as these levels hold, the intermediate and longer term picture remain somewhat positive. This robust rally will come under pressure if the major averages encounter a series of distribution days or if they fall back below their important moving averages. It is also healthy to see a slew of commodities surge to fresh multi year and record highs. Gold, silver, cotton, and coffee are a few well known commodities that have enjoyed phenomenal moves recently.
It is also very encouraging to see the bulls show up and continuously defend support. Since the April 2010 highs, the major averages have pulled back a handful of times, each somewhat mild, not exceeding the -20% level which technically defines a bear market. Therefore, until the major averages pullback over -20% from their recent highs this could be interpreted as a temporary correction, albeit a steep one, before the bulls again return and resume this powerful uptrend that began in March 2009. A characteristic of this bull market and others is that every time the market pulls back the bulls promptly show up to quell the bearish pressure and defend support. That said, until support is breached, the bulls deserve the bullish benefit of the doubt.
Bearish Case: Debt, Tepid Economic Growth, & Unemployment Are Still A Concern
Sovereign debt woes and tepid economic growth continue to be the bane of this rally. Since the April 2010 highs, several popular rating agencies have downgraded a slew of European nations and financial institutions’ debt. Not surprisingly, this corresponded with a steep sell-off in the euro which sent it down to fresh 4-year low earlier this summer. Italy, Hungary, Portugal, Greece, Iceland, and Spain are some of the European nations which analysts believe are dealing with onerous debt levels. All of this helped gold and bonds race higher as the so-called “safe haven” trade. Gold prices surged to all-time highs last month as the US dollar fell.
The bears believe that the effects of the massive worldwide stimulus packages from 2008-2009 are beginning to wane and the future of the global economic recovery may not be as robust as initially expected. The bears also claim that technically this rally is done and overdue for a serious intermediate-term correction. Since the March ‘09 lows, the major averages have retraced (rallied back) a little over +50% of their 2007-2009 bear market decline, which is a fairly typical bounce before a new down leg ensues. Only time will tell exactly how this plays out.
Market Action: Price & Volume B+
As we know, the major averages topped out in October 2007 and then proceeded to precipitously plunge until they put in a near-term bottom in early March 2009. Since then, the market snapped back and enjoyed hefty gains which helped send the major averages to one of their strongest 18-month rallies in history. The small cap Russell 2000 Index was the standout winner, surging a whopping +117%. The tech-heavy Nasdaq Composite is a close second, having vaulted +100%before reaching its interim high of 2,535 on April 26, 2010. The benchmark S&P 500 Index raced+83% higher before hitting its near term high of 1,219 on April 26, 2010, and the Dow Jones Industrial Average soared +74% before printing its near-term high of 11,258 on April 26, 2010.
This data indicates that Monday, April 26, 2010 appeared to be a very important day for the market because that is the day that most of the popular averages printed their near-term highs and negatively reversed by closing lower from new recovery highs. In addition, after such hefty moves, the 11-18% pullback was healthy enough to help shake out the weak hands and send the major averages higher last month. However, if the 2010 lows are further breached, then odds will favor that even lower prices will follow. Allow us to be clear: the action since the July low has been robust, very healthy, and suggests the bulls are now back in control of this market. Trade accordingly. Never argue with the tape, and always keep your losses small.
Are You Looking For Someone To Manage Your Money?
Our Private Wealth Management Services Can Help You!
Sarhan Wealth Management provides both global macro and equity only consulting services to high net worth and institutional clients around the world. For years, our 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 historical data is 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!
30
Sep
Q3 Commentary: Best September Since 1939!
September 2010 Market Commentary
The major market indexes scored a sound follow-through day (FTD) on September 1, 2010 and spent the rest of the month racing higher. This corresponded with a steep sell off in the US dollar and a robust rally in many well-known commodities. The benchmark S&P 500 index and the Dow Jones Industrial Average both soared last month and enjoyed their best September since 1939, rallying 9% and 8%, respectively. The tech-heavy Nasdaq composite led its peers, surging a whopping +13% last month. For the year, the Dow Jones Industrial Average and the S&P 500 index are both up just under +3%, while the Nasdaq Composite is leading the major averages with a +5% gain.
Background:
Before we address the current market outlook, it is important to step back and put the recent action in proper context. Since the March 2009 bottom, the major averages have experienced explosive gains on the simple premise that the global economic recovery will be robust. That notion helped the benchmark S&P 500 Index rally +83% before reaching a near-term top of 1,219 on April 26, 2010. Since then, notions of a robust recovery have come into question, especially due to the ominous debt levels in several European nations coupled with a high rate of unemployment and a slowing economic recovery in the US. The summer sell off sent the major averages down –11% to -18% from their 2010 highs before bottoming in early July. The euro, which has also enjoyed healthy gains since March 2009, topped out in December 2009 and has steadily fallen during the first half of 2010, then rallied smartly off its multi year lows in July and continued advancing last month. Looking ahead, it is imperative to monitor the direction the euro is heading in order to better gauge investors’ world-wide collective appetite for risk.
Bullish Case: Stocks Are Strong!
History shows us that most bull markets last between 18-36 months before they fail. Therefore, the fact that we are only beginning our 18th month bodes well for this bull market. It is also somewhat encouraging to see nearly every government across the globe step up and unanimously infuse an unprecedented amount of capital into the global economy and more recently, reiterate their stance in recent months to infuse more capital if needed (which are now known as quantitative easing 1 and 2). This unified action saved the global economy from entering a deeper recession and laid the foundation for this massive bull run. On average, central banks around the world are still keeping rates near historic lows to help spur economic growth, while a few have begun raising rates. As of this writing, the major averages continue are racing higher and managed to negate a massive head and shoulders topping pattern, breakout of a smaller inverse head and shoulders pattern, and trade back above their 50 and 200 DMA lines. As long as these levels hold, the intermediate and longer term picture remain somewhat positive. This robust rally will come under pressure if the major averages encounter a series of distribution days or if they fall back below their important moving averages.
It is also very encouraging to see the bulls show up and continuously defend support. Since the April 2010 highs, the major averages have pulled back a handful of times, each somewhat mild, not exceeding the -20% level which technically defines a bear market. Therefore, until the major averages pullback over -20% from their recent highs this could be interpreted as a temporary correction, albeit a steep one, before the bulls again return and resume this powerful uptrend that began in March 2009. A characteristic of this bull market and others is that every time the market pulls back the bulls promptly show up to quell the bearish pressure and defend support. That said, until support is breached, the bulls deserve the bullish benefit of the doubt.
Bearish Case: Debt & Unemployment Are Still A Concern
Sovereign debt woes and tepid economic growth continue to be the bane of this rally. Since the April 2010 highs, several popular rating agencies have downgraded a slew of European nations and financial institutions’ debt. Not surprisingly, this corresponded with a steep sell-off in the euro which sent it down to fresh 4-year low earlier this summer. Italy, Hungary, Portugal, Greece, Iceland, and Spain are some of the European nations which analysts believe are dealing with onerous debt levels. All of this helped gold and bonds race higher as the so-called “safe haven” trade. Gold prices surged to all-time highs last month as the US dollar fell.
The bears believe that the effects of the massive worldwide stimulus packages from 2008-2009 are beginning to wane and the future of the global economic recovery may not be as robust as initially expected. The bears also claim that technically this rally is done and overdue for a serious intermediate-term correction. Since the March ’09 lows, the major averages have retraced (rallied back) a little over +50% of their 2007-2009 bear market decline, which is a fairly typical bounce before a new down leg ensues. Only time will tell exactly how this plays out.
Market Action: Price & Volume B+
As we know, the major averages topped out in October 2007 and then proceeded to precipitously plunge until they put in a near-term bottom in early March 2009. Since then, the market snapped back and enjoyed hefty gains which helped send the major averages to one of their strongest 17-month rallies in history. The small cap Russell 2000 Index was the standout winner, surging a whopping +117%. The tech-heavy Nasdaq Composite is a close second, having vaulted +100% before reaching its interim high of 2,535 on April 26, 2010. The benchmark S&P 500 Index raced +83% higher before hitting its near term high of 1,219 on April 26, 2010, and the Dow Jones Industrial Average soared +74% before printing its near-term high of 11,258 on April 26, 2010.
This data indicates that Monday, April 26, 2010 appeared to be a very important day for the market because that is the day that most of the popular averages printed their near-term highs and negatively reversed by closing lower from new recovery highs. In addition, after such hefty moves, the 11-18% pullback was healthy enough to help shake out the weak hands and send the major averages higher last month. However, if the 2010 lows are further breached, then odds will favor that even lower prices will follow. Allow us to be clear, last month’s action was robust, very healthy, and suggests the bulls are now back in control of this market. Trade accordingly. Never argue with the tape, and always keep your losses small.
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01
Sep
August 2010's Monthly Stock Market Commentary
Market Ends August & Year In the Red:
The major market indexes ended lower last month and are down for the year. As the US dollar has recently advanced, fears of a global economic slowdown have been escalating. For the year, the Dow Jones Industrial Average has shed -4%, the S&P 500 Index is down -6%, an the tech-heavy Nasdaq Composite is leading the major averages lower, down -6.8%. The confirmed rally that began on the July 7, 2010 follow-through day (FTD) ended on Tuesday, August 24, 2010 however, a new FTD emerged on September 1, 2010 which confirms the latest rally attempt.
Before we address the current market outlook, it is important to step back and put the recent action in proper context. Since the March 2009 bottom, the major averages have experienced explosive gains on the simple premise that the global economic recovery will be robust. That notion helped the benchmark S&P 500 Index rally +83% before reaching a near-term top of 1,219 on April 26, 2010. Since then, notions of a robust recovery have come into question, especially due to the ominous debt levels in several European nations and the major averages are each down –11% to -17% from their 2010 highs. The euro, which has also enjoyed healthy gains since March 2009, topped out in December 2009 and has steadily fallen during the first half of 2010, then rallied smartly in July, but lost ground in August. Looking ahead, it is imperative to monitor the direction the euro is heading in order to better gauge investors’ world-wide collective appetite for risk.
Bullish Case:
History shows us that most bull markets last between 18-36 months before they fail. Therefore, the fact that we are only beginning our 17th month bodes well for this bull market. It is also somewhat encouraging to see nearly every government across the globe step up and unanimously infuse an unprecedented amount of capital into the global economy and more recently, reiterate their stance in recent weeks to infuse more capital if needed. This unified action saved the global economy from entering a deeper recession and laid the foundation for this massive bull run. On average, central banks around the world are still keeping rates near historic lows to help spur economic growth, while a few have begun raising rates. As of this writing, the major averages continue to find formidable support near their 2010 lows. As long as these levels hold, the intermediate and longer term picture remain somewhat positive. However, if these lows are breached, then all bets are off.
It is also somewhat encouraging to see the bulls show up and continuously defend support. Since the April 2010 highs, the major averages have pulled back a handful of times, each somewhat mild, not exceeding the -20% level which technically defines a bear market. Therefore, until the major averages pullback over -20% from their recent highs this could be interpreted as a temporary correction, albeit a steep one, before the bulls again return and resume this powerful uptrend that began in March 2009. A characteristic of this bull market and others is that every time the market pulls back the bulls promptly show up to quell the bearish pressure and defend support. That said, until support is breached, the bulls deserve the benefit of the doubt.
Bearish Case: