Stocks Consolidate Last Week’s Advance

Monday, January 10, 2011
Stock Market Commentary:

The major averages ended mixed to slightly lower as the USD pulled back to consolidate last week’s impressive advance. Heretofore, market internals remain healthy evidenced by broad leadership, favorable volume patterns, a rising advance/decline line, and a healthy number of new highs on both major exchanges.

M&A News Dominates the Headlines:

The major averages and the USD pulled back on Monday as they consolidate last week’s impressive rally. For the most part, the news was quiet. The big headlines came from the latest round of multi-billion dollar mergers and acquisitions. Tech stocks continue to dominate evidenced by the healthy action the Nasdaq & Nasdaq 100 and several popular tech stocks: AAPL, GOOG, BIDU, NFLX, FFIV, ARUN, ROVI, CRM, VMW, to name a few. It is also important to note that the Nasdaq 100 has completely recovered its 2007-2009 decline and currently has hit a new recovery high! Elsewhere, oil and gold were little changed as the euro edged higher.

Market Action- Market In Confirmed Rally Week 19

It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. The market remains in a confirmed rally until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.

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