31 Aug
Daily Market Commentary

Volatile Month Finally Ends!

Wednesday, August 31, 2011
Stock Market Commentary:

Stocks were quiet on Wednesday as they continue to consolidate their very strong week-long +7% rally. The major averages are technically in a new confirmed rally which means probing the long side may be prudent, if/when high ranked stocks begin to trigger fresh technical buy signals. Even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

ADP Jobs Report Does Not Disappoint:

Before Wednesday’s open, ADP, the country’s largest private payrolls company, said U.S. employers added +91,000 new jobs in August which barely missed the Street’s 100k estimate. The news bodes reasonably well for Friday’s much anticipated non farm payrolls report. The major averages ended in the red this month but enjoyed sharp gains in the final week of August. It is important to note that the market is simply bouncing on light volume towards their respective 50 and 200 DMA lines. It will be critical to see how stocks react when they get to that important inflection point.
Market Outlook- Confirmed Rally!
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

29 Jul
Daily Market Commentary

Stocks Smacked As Debt Debate Continues

Friday, July 29, 2011
Stock Market Commentary:

Stocks ended lower this week as investors digested a slew of weaker-than-expected economic and earnings data and the debt stalemate continued in D.C.. It was disconcerting to see all the major averages slice and close below their respective 50 DMA lines in the final week of July which suggests the bears are getting stronger. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Monday-Wednesday- Stocks Smacked As Debt Deadline Approaches:

On Monday, stocks opened lower due to the ongoing debt saga in Washington D.C. However, the bulls showed up and quelled the bearish pressure after Republicans and Democrats prepared separate plans to raise the debt limit before the August 2, 2011 deadline. Moody’s, the popular rating agency, cut Greece’s debt rating further into junk territory which added to the downward pressure in equity markets across much of the developed world. As the political drama continues to unfold, a slew of companies are released their Q2 results this week. So far, over +80% of the S&P 500 companies that reported earnings topped estimates which bodes well for the ongoing economic recovery. Here is a short list of some of the high ranked/high profile companies that released their Q2 results in the final week of July: BIDU, AMZN, NFLX, GMCR, WFM, ACOM, POT, DECK, JAZZ, CRR, CLF, SRCL, BIIB, & TNAV. As always, in addition to analyzing the actual numbers we tend to focus on how a company (and the market) reacts to data.
On Tuesday, investors digested a slew of mixed earnings and economic data and continued to wait for a solution to the debt problem in D.C. Data on the Economic front was mixed to slightly positive. The S&P Case-Shiller index of U.S. home prices rose in May.  This was received well by the market and was the second consecutive monthly gain for domestic home prices. Meanwhile, a separate report showed that new-home sales slid -1% in June to an annual rate of 312,000. Economists like to see an average annual rate near 750,000 to be considered healthy. Finally, U.S. consumer confidence rose in July which bodes well for the economic recovery. The Conference Board said its index hit 59.5 in July which topped analyst estimates.
Stocks opened lower on Wednesday as the debt stalemate continued in D.C. and investors digested the latest round of tepid economic and mixed earnings data. On the economic front, durable goods orders slid -2.1% in June which was much lower than the Street’s forecast for a gain of +0.4%. A separate report from the Federal Reserve Bank of Chicago said manufacturing output in the Midwest region was weaker in June which does not bode well for the ongoing economic recovery. The Fed’s Beige Book showed that economic growth was moving forward at a very slow rate. Elsewhere, the political stalemate continued in D.C. which led many to question whether or not the U.S.’ AAA credit rating may be cut by one of the popular rating agencies. Moreover, investors are concerned what the ramifications of such a cut would mean for the global financial system.

Thursday-Friday’s Action: Stocks Smacked As Debt Stalemate Continues

Before Thursday’s open, the Labor Department said jobless claims fell by a seasonally adjusted -24,000 to 398,000 last week.  It was somewhat encouraging to see claims fall below –400,000 for the first time since April 2. In case you do not know, most economists view 400,000 as the dividing line between job growth and job contraction. So it will be interesting to see if this is a one off or the beginning of a new trend (stronger job growth). Earnings news was mixed, Crocs Inc. (CROX), Skechers USA (SKX), and Green Mountain Coffee (GMCR) all rallied while Exxon Mobil (XOM) and Akamai Technologies (AKAM) fell after releasing their Q2 results. After Thursday’s close, the House delayed a key vote to back Speaker Boehner’s latest plan which sent futures lower overnight. Stocks opened sharply lower after the government said Q2 GDP only rose +1.3% which fell short of the +1.8% forecast. It was also disconcerting to see first quarter’s GDP lowered to +0.4% from +1.9%.

Market Outlook- Market In A Correction

The latest action in the major averages suggests the market is back in a correction as all the major averages are flirting with their respective 200 DMA lines.  Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests caution is paramount at this stage until all the major averages rally back towards their respective 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.
 

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25 Jul
Daily Market Commentary

Debt Deadline; To Be, Or Not To Be?

Monday, July 25, 2011
Stock Market Commentary:

Stocks opened lower due to the ongoing debt saga in Washington D.C. However, the bulls showed up and quelled the bearish pressure after Republicans and Democrats prepared separate plans to raise the debt limit before the August 2, 2011 deadline. It was very encouraging to see the Nasdaq 100 break out of its current multi month base and hit new 2011 high on Friday! Technically, it is encouraging to see the major average find support and bounce off their respective 50 DMA lines in the middle of July. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Debt Deadline, Greek Debt Cut (Again), & Earnings Continue In Droves!

On Monday, news spread that both Republicans and Democrats prepared separate plans to raise the debt limit and to avoid a technical default by next Tuesday. In Europe, Moody’s, the popular rating agency, cut Greece’s debt rating further into junk territory which added to the downward pressure in equity markets across much of the developed world. As the political drama continues to unfold, a slew of companies are slated to released their Q2 results this week. So far, over +80% of the S&P 500 companies that reported earnings topped estimates which bodes well for the ongoing economic recovery. Here is a short list of some of the high ranked/high profile companies slated to release Q2 results this week: BIDU, AMZN, NFLX, GMCR, WFM, ACOM, POT, DECK, JAZZ, CRR, CLF, SRCL, BIIB, & TNAV. As always, in addition to analyzing the actual numbers we tend to focus on how a company (and the market) reacts to data.

Market Outlook- Confirmed Rally

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests the rally is back in a confirmed rally as all the major averages are now flirting with fresh 2011 highs. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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22 Jul
Daily Market Commentary

Nasdaq 100 Surges To A Fresh 2011 High!

Friday, July 22, 2011
Stock Market Commentary:

Stocks ended the week higher after EU leaders announced a new bailout for their debt stricken nations and investors digested a slew of stronger-than-expected economic and earnings data. It was very encouraging to see the Nasdaq 100 break out of its current multi month base and hit new 2011 highs! Technically, it is encouraging to see the major average find support and bounce off their respective 50 DMA lines and positively reverse (open lower and close higher) for the week. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.
Monday-Wednesday’s Action: Stocks Bounce off Support!
On Monday, Treasury Secretary Timothy Geithner made it abundantly clear that if the U.S. were to default on its debt, the ramifications would be catastrophic. Over the weekend, U.S. lawmakers failed to reach a deal which caused investors to focus more on the August 2, 2011 deadline. U.S. economic data was light on Monday, home builders’ confidence rose slightly and topped estimates but remains weak from a historical perspective. The recent soft patch in the economy led Goldman Sachs (GS) to lower its forecast for real U.S. economic growth to +1.5% in the second quarter and +2.5% in Q3, down from +2% and +3.25%, respectively. However, all our anecdotal evidence points to a strong summer holiday season across the East Coast of the U.S. and Canada which, barring some unforeseen event, should bode well for Q3 GDP.
On Tuesday, housing starts topped estimates and jumped to the fastest pace in five months. The Commerce Department said work began at an annual rate of 629,000 houses which is up +14.6%from the prior month. This was the latest in a string of stronger-than-expected data from the ailing housing market. Hopefully, better days lie ahead for the ailing housing sector. Elsewhere, several high profiled companies released stronger-than-expected Q2 results which bodes well for the current rally. IBM &  Coca-Cola (KO) led the way higher when they reported solid Q2 results. Barring some unforeseen event, we are expecting another solid earnings season.
On Wednesday, the up and down ride continued for the ailing housing market. The National Association of Realtors said existing home sales slid -3.8% in May to an annual rate of 4.81 million. The year-on-year rate tanked to –15.3% from April’s negative -13.8% reading. The closely followed supply gauge rose to 9.3 months from April’s 9.0 months which is not ideal. It was somewhat encouraging to see the median home price rise +3.4% to $166,500. The Mortgage Bankers Association said mortgage applications jumped last week for the  largest increase in four months thanks in part to a flurry of refinancing and low interest rates. The IPO market remains encouraging with two high profile company’s topping estimates on Wednesday, Zillow (Z) and Skullcandy (SKUL) both began trading near the top end of their ranges which is encouraging.

SPX Perched Below Resistance

SPX Perched Below Resistance

Thursday & Friday’s Action: New EU Bailout Plan Lifts Stocks

Before Thursday’s open, the euro rallied smartly after Euro-zone leaders proposed a new aid package for Greece and restructured their closely followed rescue fund. The changes are designed to reduce the debt burdens of Greece, Portugal and Ireland and allow the European Financial Stability Facility (EFSF) to charge rates as low as 3.5%. The plan also extends the average maturity of the loans to 7.5-15 years.
In the U.S., the Labor Department said weekly jobless claims rose 10,000 to 418,000 which topped the Street’s estimate for 410,000. The data showed nearly 1,750 additional job cuts due to the Minnesota government shutdown. Stocks added to gains after Leading economic indicators in the U.S. and the Philly Fed survey rose +0.3. The major averages are on track to hit fresh 2011 highs which is a very healthy sign.  The latest round of earnings data topped estimates which is another encouraging sign for the market. Stocks were quiet on Friday as investors digested a slew of mixed earnings data. McDonald’s (MCD) jumped to a new all-time high after smashing estimates but Microsoft (MSFT), Honeywell International (HON), and Caterpillar (CAT) disappointed the Street.

Market Outlook- Confirmed Rally

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests the rally is back in a confirmed rally as all the major averages are now flirting with fresh 2011 highs. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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21 Jul
Daily Market Commentary

Stocks Rally On New EU Bailout!

Thursday, July 21, 2011
Stock Market Commentary:

Stocks rallied on Thursday after EU leaders announced a new bailout for their debt stricken nations. Technically, it is encouraging to see the major average find support and bounce off their respective 50 DMA lines this week. It is also encouraging to see the major averages on track for a positive reversal (open lower and close higher) for the week. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

New EU Bailout Plan, Economic Data Helps Stocks, & Earnings Continue in Droves

Before Thursday’s open, the euro rallied smartly after Euro-zone leaders proposed a new aid package for Greece and restructured their closely followed rescue fund. The changes are designed to reduce the debt burdens of Greece, Portugal and Ireland and allow the European Financial Stability Facility (EFSF) to charge rates as low as 3.5%. The plan also extends the average maturity of the loans to 7.5-15 years.
In the U.S., the Labor Department said weekly jobless claims rose 10,000 to 418,000 which topped the Street’s estimate for 410,000. The data showed nearly 1,750 additional job cuts due to the Minnesota government shutdown. Stocks added to gains after Leading economic indicators in the U.S. and the Philly Fed survey rose +0.3. The major averages are on track to hit fresh 2011 highs which is a very healthy sign.  The latest round of earnings data topped estimates which is another encouraging sign for the market.

Market Outlook- Confirmed Rally

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests the rally is back in a confirmed rally as all the major averages are now flirting with fresh 2011 highs. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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20 Jul
Daily Market Commentary

Existing Home Sales & Stocks Fall

Wednesday, July 20, 2011
Stock Market Commentary:

Stocks were quiet on Wednesday as investors digested mixed economic data and AAPL’s strong quarterly results. Technically, it is encouraging to see the major average find support and stay above their respective 50 DMA lines. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Existing Home Sales Fall, IPO Market Is Strong, Earnings Are Mixed, & Debt Woes Continue!

The up and down ride continued for the ailing housing market. The National Association of Realtors said existing home sales slid -3.8% in May to an annual rate of 4.81 million. The year-on-year rate tanked to –15.3% from April’s negative -13.8% reading. The closely followed supply gauge rose to 9.3 months from April’s 9.0 months which is not ideal. It was somewhat encouraging to see the median home price rise +3.4% to $166,500. The Mortgage Bankers Association said mortgage applications jumped last week for the  largest increase in four months thanks in part to a flurry of refinancing and low interest rates.
The IPO market remains encouraging with two high profile company’s topping estimates on Wednesday, Zillow (Z) and Skullcandy (SKUL) both began trading near the top end of their ranges which is encouraging. On the political front, investors are looking forward to see lawmakers reach a deal to raise the debt ceiling and curb spending. In Europe, German Chancellor Angela Merkel met with French President Nicholas Sarkozy in Berlin ahead of another meeting of EU leaders to find a solution to Europe’s crushing debt woes.
Market Outlook- Uptrend Under Pressure:
The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under severe pressure as investors patiently await earnings season and continue to digest the latest economic data. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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19 Jul
Daily Market Commentary

Strong Housing & Earnings Lift Stocks!

Tuesday, July 19, 2011
Stock Market Commentary:

Stocks bounced nicely off their respective 50 DMA lines after a flurry of stronger-than-expected economic and earnings data was announced. It is important to note that all the major averages are back above their respective 50 DMA lines which is an encouraging sign. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Housing Starts & Earnings Top Estimates!

On Tuesday, housing starts topped estimates and jumped to the fastest pace in five months. The Commerce Department said work began at an annual rate of 629,000 houses which is up +14.6% from the prior month. This was the latest in a string of stronger-than-expected data from the ailing housing market. Hopefully, better days lie ahead for the ailing housing sector. Elsewhere, several high profiled companies released stronger-than-expected Q2 results which bodes well for the current rally. IBM &  Coca-Cola (KO) led the way higher when they reported solid Q2 results. Barring some unforeseen event, we are expecting another solid earnings season.

Market Outlook- Uptrend Under Pressure:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under severe pressure as investors patiently await earnings season and continue to digest the latest economic data. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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14 Jul
Daily Market Commentary

S&P 500 Violates 50 DMA Line!

Thursday, July 14, 2011
Stock Market Commentary:

Stocks closed lower on Thursday as investors digested a slew of economic data. Thursday was the fifth consecutive session stocks closed near their lows which is not ideal. The benchmark S&P 500 index sliced below its 50 DMA line on Thursday but the Dow Jones Industrial Average and the tech heavy Nasdaq composite are still above their respective 50 DMA lines. Once all the major averages violate their respective 50 DMA lines, the rally will end and the bears will have regained control of this market. Looking forward, the next level of resistance is their respective 2011 highs.

Jobless Claims Top Estimates, PPI Is Tame, Bernanke Concludes Testimony, and Debt Talks Continue In D.C.:

On Thursday, investors digested a slew of economic data, most of which topped estimates. The Labor Department said, weekly jobless claims fell -22,000 to 405,000 last week which is much closer than to the closely followed 400,000 mark. The latest read on inflation was tame which helped ease pressure on the Fed to raise rates in the near future. The producer price index (PPI) fell -0.4% which was below the -0.3% forecast. Elsewhere, retail sales rose +0.1% which topped the unchanged reading expected by Wall Street. Bernanke spent most of his day testifying on Capital Hill where he made it clear that he was not immediately ready to embark on QE 3. Stocks immediately sold off on the news. The pressure in D.C. is palpable regarding the ongoing debt/deficit talks.  The President knows that the country is at a critical juncture and if this issue is not resolved swiftly the ramifications will be ominous, it will tarnish his legacy, and most likely cost him a second term in office. After Thursday’s close, Google (GOOG) surged nearly 10% after smashing Q2 estimates which bodes well for Q2 earnings season.

Market Outlook- Uptrend Under Pressure:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under pressure as investors patiently await earnings season and continue to digest the latest economic data. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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11 Jul
Daily Market Commentary

Debt, Debt, & More Debt!

Monday, July 11, 2011
Stock Market Commentary:

Stocks were under pressure on Monday as fresh debt woes surfaced from the U.S. and Europe. However, it is encouraging to see that all the major averages remain above their respective 50 DMA lines and many leaders are still acting well considering Friday’s lousy jobs report and fresh debt woes from Italy. The next level of resistance is their respective 2011 highs.

Debt, Debt, & More Debt!

Over the weekend, fresh debt concerns surfaced from the U.S. and Europe which put pressure on stocks and a slew of commodities. In the U.S., the latest debt/deficit talks dragged on as members of both sides of the aisle failed to agree on much needed restructuring. In Europe, an emergency session was held to discuss Italy’s mounting debt woes.
From our point of view, what is happening now in the Western World is a slow but potentially fatal shift of power. History shows us that power tends to follow wealth and what is happening now is that wealth is slowly shifting from the West to the East. Hopefully, Western politicians are aware of this simple yet often overlooked fact and will due what is necessary to curb their outrageous spending and get back on the right track.

Market Outlook- Uptrend Under Pressure:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the current rally is under pressure as investors patiently await earnings season. Until then, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.
 

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08 Jul
Daily Market Commentary

Lousy Jobs Report Weighs On Stocks

Friday, July 8, 2011
Stock Market Commentary:

It was encouraging to see stocks rally on Thursday as investors digested a slew of economic data from across the globe. It is also encouraging to see that all the major averages remain above their respective 50 DMA lines and are on track for a second consecutive weekly gain which suggests the bulls remain in control of this market. The next level of resistance is their respective 2011 highs.

Monday-Wednesday: Stocks Edge Higher

Stocks were closed on Monday in observance of the July 4th holiday. Overseas, stock markets edged higher as investors awaited Friday’s much anticipated jobs report. Stocks were quiet on Tuesday after the Commerce Department said U.S. factory goods rose+0.8% in May to $445.29 billion. The gain followed a large decline in April and bodes well for the ongoing economic recovery. The report also reiterated a series of stronger than expected economic data which suggests the economy is improving. Elsewhere, Moody’s Investors Service, a popular rating agency, downgraded Portugal’s debt to junk status which sparked fresh concerns regarding the European debt crisis.
Before Wednesday’s open, China decided to raise their key interest rate by 25 basis points to curb inflation and their robust economy. Keep in mind that a slowdown in China curbs demend for so-called risk assets. Therefore, this put mild pressure on a stocks and a slew of commodities. At 10am EST, the ISM released its service index which fell short of the Street’s estimates and bodes poorly for the economic recovery.

Thursday & Friday: Job Picture Improves; Stocks Rally:

Before Thursday’s open, the European Central Bank (ECB) raised rates by 25 basis points to help curb inflation. The ECB raised rates to +1.5% which is the highest level since March 2009. Germany, Europe’s largest economy, said industrial production rose by +1.2% which topped the Street’s estimate for a gain of +0.8%. In The U.S., ADP, the country’s largest private payrolls company, said U.S. employers added +157,000 which easily topped the Street’s estimate for a gain of less than 100,000. Even though the number topped estimates it was still below the +250,000 jobs needed each month to lower the unemployment rate. Several large U.S. retailers reported stronger than expected same store sales in June which bodes well for the economic recovery. The Labor Department said weekly jobless claims fell by -14,000 to 418,000 which is still above the dreaded 400,000 mark. However, a lower reading for the week bodes well for the overall employment situation. Before Friday’s open, the Labor Department said U.S. employers only added +18,000 new jobs last month which was sharply lower than the Street’s forecast for a gain of +105,000. The unemployment rate rose to +9.2%, up from last month’s reading of +9.1%. Equally worrisome, last month’s already low reading of +54,000 was lowered to +25,000.

Market Outlook- Market In A Confirmed Uptrend:

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the action remains bullish until the major averages and leading stocks violate their respective 50 DMA lines. Until then, the market deserves the bullish benefit of the doubt. Barring some unforeseen event, investors will likely be focusing on the jobs market this week and then spend the rest of the month focusing on the latest round of economic and Q2 earnings data. If you are looking for specific help navigating this market, please contact us for more information.
 

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