Tuesday, January 24, 2012
Stock Market Commentary:
Stocks and a slew of other risk assets fell after the latest deal to save Greece fell apart. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. It was also encouraging to see the S&P 500 break above its downward trendline and its longer term 200 DMA line. Looking forward, the S&P 500 is doing its best to stay above its Q4 2011’s high (~1292) and now has its sights set on its 2011 highs near 1370. In addition, the bulls remain in control as long as the benchmark S&P 500 trades above 1292 and then its 200 DMA line.
Greece Deal Falls Apart
On Tuesday, markets opened lower as investors digested a slew of earnings news and another failed deal to save Greece. European leaders rejected proposals from private bondholders for a Greek “haircut” due to the size of the cut. Private bond holders argued for smaller cuts while EU leaders want larger cuts to prevent another default in March. Christine Lagarde, managing director of the IMF, told CNBC that the fund needs another $500B to help tackle the European debt crisis.
Separately, the U.S. Federal reserve began its two-day meeting and after the close tech giants Apple (AAPL) and Yahoo (YHOO) will release their latest quarterly results and Obama will deliver his State of the Union address. Other blue chips such as McDonald’s (MCD) and Verizon (VZ), among others released mixed results.
TUESDAY: 2-yr note auction, FOMC meeting begins, Obama’s State of the Union address; Earnings from DuPont, J&J, McDonald’s Travelers, Verizon, Apple, Yahoo
WEDNESDAY: Weekly mortgage apps, FHFA house price index, pending home sales, oil inventories, FOMC meeting announcement, Bernanke press conference; Earnings from Boeing, ConocoPhillips, United Tech, Delta, Motorola Solutions, Amgen, Netflix, SanDisk, Symantec
THURSDAY: Durable goods orders, jobless claims, new home sales, leading indicators, 7-yr note auction; Earnings from AT&T, Caterpillar, 3M, Nokia, AutoNation, Bristol-Myers, Time Warner Cable, Motorola Mobility, Starbucks
FRIDAY: GDP, consumer sentiment; Earnings from Chevron, P&G, DRHorton
Market Outlook- New Rally Confirmed
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December. Now that the major U.S. averages scored a proper follow-through day the path of least resistance is higher. Looking forward, one can err on the long side as long as the benchmark S&P 500 remains above support (1292). Leadership is beginning to improve which is another healthy sign. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. 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!