Another Strong Week on Wall Street

Friday, April 23, 2010
Stock Market Commentary:

The major averages ended higher this week as investors digested the latest round of economic and earnings news. Volume, an important indicator of institutional sponsorship, was reported lower compared to Thursday’s totals. Advancers led decliners by over a 2-to-1 ratio on the NYSE and by a 17-to-10 ratio on the Nasdaq exchange. New 52-week highs again easily trumped new lows on both exchanges. There were 80 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 70 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally.

Monday-Wednesday’s Action:

On Monday, stocks ended mixed after after Daimler AG (DAI +1.79%) and Citigroup (C -0.21%) reported better-than-expected results and news broke that the Securities and Exchange Commission did not unanimously approve pursuing a case against Goldman Sachs Group Inc. (GS -1.04%). Stocks edged higher on Tuesday after after Goldman Sachs (GS) said Q1 earnings almost doubled and reaffirmed that it did not mislead investors. After Tuesday’s close, Apple (AAPL +1.64%) blew away estimates after reporting another gang buster quarter.

Stocks ended mixed on Wednesday as speculation spread that the international aid package will not be enough to help Greece avoid defaulting on its debt. So far, approximately 1/4 of the companies in the benchmark S&P 500 have reported their Q1 results with approximately 90% of them beating estimates. This has been one of the strongest quarters in years which bodes well for the economic recovery. In addition, less than -3% of those companies missed estimates which is another healthy data point. Remember, that it is very important to not only focus on the companies results but how they react to the their numbers as we continue to make our way through the heart of earnings season.

Thursday & Friday’s Action:

On Thursday, stocks shook off earlier weakness and turned positive after President Obama outlined his plan to overhaul the financial system. Stocks closed higher on Friday after Greece tapped the IMF for emergency funds. On the economic front, new home sales and the latest read on durable goods were released. New home sales surged a whopping +27% in March which was the highest reading since 1963! In addition, housing stocks soared this week which bodes well for the national real estate recovery and supports our notion that the housing market has officially bottomed.

Market Action- Confirmed Rally:

It is important to note that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. However, the fact that we have yet to see a modest pullback bodes very well for the bulls. Trade accordingly.

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