Wednesday, August 31, 2011
Stock Market Commentary:
Stocks were quiet on Wednesday as they continue to consolidate their very strong week-long +7% rally. The major averages are technically in a new confirmed rally which means probing the long side may be prudent, if/when high ranked stocks begin to trigger fresh technical buy signals. Even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.
ADP Jobs Report Does Not Disappoint:
Before Wednesday’s open, ADP, the country’s largest private payrolls company, said U.S. employers added +91,000 new jobs in August which barely missed the Street’s 100k estimate. The news bodes reasonably well for Friday’s much anticipated non farm payrolls report. The major averages ended in the red this month but enjoyed sharp gains in the final week of August. It is important to note that the market is simply bouncing on light volume towards their respective 50 and 200 DMA lines. It will be critical to see how stocks react when they get to that important inflection point.
Market Outlook- Confirmed Rally!
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.