07 Dec
Daily Market Commentary

Stocks End Mixed As Volume Recedes

Monday 12.07.09

Market Commentary:

The stock market ended mixed on Monday after trading in a very tight range for most of the session. Volume, an important indicator of institutional sponsorship, was lower than Friday’s levels on both major exchanges which suggested large institutions were not aggressively selling stocks. Advancers led decliners by about a 10-to-9 ratio on the NYSE and were roughly even on the Nasdaq exchange. There were 29 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, less than the total of 45 issues that appeared on the prior session. Leadership among high-ranked growth stocks had dried up in recent weeks, so the expansion in new highs this week has been a welcome improvement. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Bernanke Speaks:

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30 Nov
Daily Market Commentary

Buyers Emerge In Final Hour As Dubai Woes Ease

Mon November 30, 2009

Market Commentary:

The U.S. stock market closed higher on the first full trading session after the Dubai news broke late last week. On Friday stocks sold off as investors unloaded their positions ahead of the the weekend. Advancers led decliners by a 11-to-8 ratio on the NYSE and were about even on the Nasdaq exchange.  As expected, volume totals were heavier than Friday’s holiday-shortened trading session. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed by a small margin on the Nasdaq exchange.

Buyers Emerge In The Final Hour As Dubai Woes Ease

Stocks spent most of the session in the red but buyers showed up in the final hour which helped the major averages close higher on the day. Monday was the first full trading session since the Dubai news spread late last week and it was encouraging to see the major averages rally as concerns continue to ease regarding the possible default of Dubai World. Dubai World said that it is currently engaged in “constructive” initial talks with its lenders to restructure about $26 billion of debt. At this point, the world is beginning to accept the notion that Dubai World is an isolated incident and it will most likely be bailed out by one of its wealthy neighbors. Since no one knows for sure exactly how much debt is at stake, most investors believe that the total debt is under $100 billion (highest estimates). If that is the case, it is only a “blip” on the world’s economic radar. More importantly, if Dubai is bailed out then it will become a moot issue.

U.S. Dollar Falls:

The U.S. dollar fell on Monday which helped stocks and a slew of commodities. The Chinese government reiterated its stance regarding its stimulus package after India announced its economy grew at a very healthy rate of +7.9%, which topped estimates. The National Retail Federation released a report that showed that holiday traffic was up from the same period last year but the average shopper spent $343.31 in stores and online over the Thanksgiving holiday weekend, less than the $372.57 spent last year.  The group reaffirmed its forecast for a -1% decline in spending for this holiday season.

24 Nov
Daily Market Commentary

Stocks Fall As Investors Digest A Slew Of Economic Data

Market Commentary

Stocks closed lower as investors digested a slew of economic data. Volume, a critical component of institutional demand, was mixed compared to Monday’s levels; higher on the Nasdaq and lower on the NYSE. The higher volume on the Nasdaq marked a distribution day for that exchange but the lower volume on the NYSE helped those indexes avoided that fate. Decliners led advancers by over a 21-to-17 ratio on the NYSE and by over a 16-to-11 ratio on the Nasdaq exchange. There were 12 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher from the 41 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Banks Under Pressure-Again

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19 Nov
Daily Market Commentary

Sour Economic Data Hurts Stocks

Stocks Got Smacked As The Dollar Rallies:

Stocks fell across the globe as the US dollar rallied and concern spread regarding the underlying health of the economic recovery. Volume, a critical component of institutional demand, was higher than Wednesday’s levels across the board which marked a distribution day for the major averages. Decliners trumped advancers by about a 4-to-1 ratio on the NYSE and Nasdaq exchange. There were only 10 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, lower than the 40 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Tepid Economic Data Hurts Stocks

Stocks experienced their largest intra day decline this month after the latest round of ominous economic data was released. The tepid economic data led many to question how long the global economic recovery will last and sent investors flocking to the US dollar for perceived safety. Before Thursday’s opening bell, the Labor Department said jobless claims (a.k.a the number of Americans filing claims for unemployment benefits) was unchanged at a 10-month low. Stocks also got hit after a report was released that showed mortgage delinquencies surged. So far, since the financial crisis began in 2007, writedowns (a.k.a losses) of mortgage-backed debt has surpassed $1.7 trillion at some of the world’s largest financial firms. The spike in mortgage delinquencies was due to a 26-year high in unemployment and a down tick in wages. The Mortgage Bankers Association said that that out of every six home loans insured by the Federal Housing Administration there is at least one late payment and +3.32% of those loans were in foreclosure last quarter. This was the highest reading for both measures in at least 30 years and bodes poorly for the troubled housing market.
Elsewhere, the Organization for Economic Cooperation and Development (OECD) doubled its growth forecast for industrialized nations in 2010 to +1.9%. However, the group said that record debt levels may hinder future growth. Separately, the Federal Reserve Bank of Philadelphia released its general economic index which topped estimates and suggests a slight improvement in that region. Billionaire investor, Bill Gross, who runs the world’s largest bond fund- Pacific Investment Management Co. (PIMCO) in Newport Beach, California, published a report today and said that he believes record low interest rates may cause new asset bubbles for stocks and risky bonds.

Looking At The Market- Analyzing Price & Volume:

Looking at the market, leading stocks came under a little pressure today but for the most part continue to hold up well. The market caught a bid (rallied) in the last hour of trade which is typically an encouraging sign and shows that buyers are still out there and willing to show up and defend support. Highly liquid technology stocks continue to be an important area of strength as investors continue to pile into a very narrow group of stocks. Gold and silver stocks are another important area that continues to outperform. As always, it is imperative to isolate strength and let the market guide you.

17 Nov
Daily Market Commentary

Stocks Up; Dollar Up= Bulls Are Strong!

The Bulls Are Strong!

The bulls flexed their muscles today and sent the major averages higher even as the US dollar rallied! Volume, a critical component of institutional demand, was lower than Monday’s levels which indicated a lack of buying from the institutional crowd. However, the fact that the major averages were down for most of the session and closed near their intra day highs helped offset that concern.

Follow The Leaders

The major averages managed to close above near term support (formerly resistance) as the bulls continue to control this market. Most liquid leaders advanced today which reiterates the importance of keeping a close eye on the leaders. The universe of high ranked leading stocks remains uncomfortably thin which is exactly how this market has been performing since the March lows.

Economic Data:

Turning to the economic front, inflation concerns eased after the government released a weaker than expected producer price index (PPI). The headline reading increased +0.3% last month after sliding -0.6% in September. October’s reading was lower than the Street’s estimate of a +0.5% rebound. However, the “big” news in the report was that the core rate, which excludes food and energy, unexpectedly fell -0.6%, following a -0.1% decline in September. This was lower than the Street’s forecast for a +0.1% gain which helped allay inflation concerns. A separate report showed that the country’s manufacturing sector continued to grow, albeit at a very slow rate. At 1:00pm EST, the National Association of Home Builders released their housing market index which was unchanged at 17 in November and gave investors some clue on how housing starts will fare when the government releases that report tomorrow.

11 Nov
Daily Market Commentary

Gains On Lighter Volume Reveal Lackluster Buying Demand

Major Averages Rally

The major averages rallied on Wednesday, sending the benchmark S&P 500 Index to a fresh 2009 high on positive economic and political data. However, volume, a critical component of institutional demand, was reported lower on both major exchanges. That signaled that large institutions were not aggressively buying stocks. Advancers led decliners by about a 3-to-2 ratio on the NYSE and on the Nasdaq exchange. There were 47 high-ranked companies from the CANSLIM.net Leaders List making a new 52-week high and appearing on the CANSLIM.net BreakOuts Page, higher than the 36 issues that appeared on the prior session. In terms of new leadership, it was encouraging to see new 52-week highs outnumber new 52-week lows on the NYSE and Nasdaq exchange.

Chinese Industrial Demand Surges

Overnight, China reported that its industrial production surged thanks in part to strong demand. This bodes well for the global economic recovery and helps allay concern that the 8-month rally in global equities is exaggerated. Elsewhere, the Fed signaled they do not plan on raising rates any time soon. This also removed a ton of pressure on those that subscribe to the notion that the stock market’s 8-month advance was due to a massive government induced liquidity driven rally. The underlying notion is that banks are able to borrow money near record lows and then use that money however they may see fit. Most financial institutions have earned tremendous profits in recent quarters thanks in part to the relative ease of borrowing money. In general, people don’t like to hold cash (especially when rates are near zero), instead they prefer to invest it. That basically summarizes the robust move we have seen in global capital markets in recent months.
The S&P 500 Index, which skidded -38% in 2008, has rebounded +62% from a 12-year low in March. So far, approximately eighty percent of S&P 500 companies have released their Q3 results and the market’s reaction of late has been muted at best. At the beginning of earnings season, the market was steady, then sold off, then bounced back over the past week and a half as buyers showed up and bought shares. The average company in the S&P 500 that has reported their Q3 results have topped estimates according to the latest data provided by Bloomberg.com. The government reported that Q3 GDP rose last month which in part helped companies beat estimates.

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