Stocks Fall On Renewed EU Debt Woes

Thursday, August 26, 2010
Stock Market Commentary:

The major averages traded between positive and negative territory but closed lower after jobless claims fell and concern about Spain’s fiscal stability weighed on the market. Volume reported on the NYSE and the Nasdaq exchange fell on Thursday compared to Wednesday’s levels which suggested that large institutions were not aggressively selling stocks. Decliners led advancers by approximately a 2-to-1 ratio on the NYSE and on the Nasdaq exchange. New 52-week highs outnumbered new 52-week lows on the NYSE but trailed new lows on the Nasdaq exchange. There were 10 high-ranked companies from the Leaders List made a new 52-week high and appeared on the BreakOuts Page, higher from the 6 issues that appeared on the prior session.

Jobless Claims Help But Spain’s Ruling Hurts Stocks:

Before Thursday’s open, the Labor Department said applications for jobless benefits slid by 31,000, more than forecast. The report helped allay concern that American employers are not aggressively cutting jobs as the economy slows. The report showed that jobless claims slid to –473,000 in the week ended August 21, 2010. However, shares came under pressure after a Spanish court voided 5.1 billion euros ($6.48 billion) in value- added tax collected in recent years. The move caught many people off guard and sparked concern that the ruling may reignite the European debt crisis. Elsewhere, Fed Chairman Ben Bernanke is scheduled to discuss the Fed’s outlook on the economy at Friday’s annual symposium in Jackson Hole, Wyoming.

Market Action- In  A Correction:

Thursday marked Day 2 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows (Day 1) are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see weakness in the financial group while action in leading stocks has been questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.

The Market Is In A Correction, Does Your Broker Know?
If not, Contact us to learn about our Money Management Services. ACT NOW!

If you enjoyed this post, make sure you subscribe to my RSS feed!
1 reply

Trackbacks & Pingbacks

  1. Stocks Fall On Renewed EU Debt Woes…

    I found your entry interesting do I’ve added a Trackback to it on my weblog :)…

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *