Friday, July 20, 2012
Stock Market Commentary:
Stocks and a slew of other “risk-on” assets spent most of the week rallying but fell hard on Friday as EU debt woes resurfaced. The market is back in rally-mode which suggests the path of least resistance is higher. The current rally was confirmed on the June 29, 2012 follow-through day (in the immediate wake of late June’s EU summit). At this point, investors appear to be looking past the larger macro concerns (e.g. a slowing global economy, European debt crisis, fiscal and monetary cliff in the US, et al) and looking for further stimulus from global central banks, as they continue to snap up risky assets.
MONDAY-WEDNESDAY’S ACTION- Stocks Rally On Hopes of Further Fed Action:
Stocks slid on Monday as investors digested the latest round of mixed to mostly weaker than expected economic and earnings data. Stocks fell after U.S. retail sales missed estimates and business inventories topped estimates. The Empire Manufacturing report beat estimates which bodes well for the NY area. Citigroup (C), one of the largest US banks, gained 0.6% following its mixed quarterly results. The financial giant said Q2 earnings were $0.95 which beat the Street’s estimate for $0.90. Visa (V) and Mastercard (MA) enjoyed nice gains after they agreed to settle merchant litigation totally $6.6B.
THURSDAY & FRIDAY’S ACTION- Stocks Sell Off On Friday As EU Woes Flare Up:
MARKET OUTLOOK- Confirmed Rally
From our point of view, the current market is in a confirmed rally which means the path of least resistance is higher. It is somewhat encouraging to see all the major averages close above their respective 50 DMA lines. Technically, the 200 DMA line and June’s lows are the next level of support while April’s highs are the next level of resistance for the major averages. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!