Stocks Higher On A Slew of Earnings Data

Tuesday, July 20, 2010
Market Commentary:

The major averages erased earlier losses and ended near their intraday highs as investors digested the latest round of economic and earnings data. Volume, an important indicator of institutional sponsorship, was higher than Monday’s level on both exchanges. There were 18 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 from the 7 issues that appeared on the prior session. Advancers led decliners by over a 3-to-1 ratio on the NYSE and by over a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs solidly outnumbered new 52-week lows on the NYSE but trailed on the Nasdaq exchange.  For the rally to have ongoing success it will be critical for a healthy crop of leaders to continue showing up hitting new 52-week highs.

Investors Digest a Slew Of Earnings Season & Economic Data:

International Business Machines Corp. (IBM -2.50%), Texas Instruments Inc. (TXN -3.05%), Johnson & Johnson (JNJ -1.66%), and Goldman Sachs Inc (GS +2.22%) were among the high profile companies that reported earnings since Monday’s close. Initially, stocks opened lower due to a general disappointment with their numbers but the bulls showed up in the second half of the session which was an encouraging sign. A slew of housing stocks rallied after building permits rose last month. However, housing starts, which measure new production, fell in June to their lowest level since October after the government tax incentive expired.  After Tuesday’s close, Yahoo Inc. (YHOO +0.66%) and Apple Inc. (AAPL +2.57%) released their latest quarterly results. As always, it will be very interesting to see how the market reacts to their numbers.

Market Action- Rally Under Pressure:

Since the current rally began on July 1, the major averages have rallied on suspiciously light volume, leadership has been very light and resistance has held firm- all unhealthy signs. This ominous action suggests another pullback may be in the cards. That said, patience and caution are of the utmost importance until the major averages close above resistance. Trade accordingly.

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