Investors Digest a Slew of Data

SPX- Perched near multi yr highs

SPX- Perched near multi yr highs

Thursday, March 01, 2012
Stock Market Commentary:

Investors digested a slew of data from all over the world on the first day of March. 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. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 jumped above its 2011 high and hit the highest level since 2008! The bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line. Leadership continues to improve which is another healthy sign.

China’s PMI, EU MFG Contracts, & Spanish Yields Fall, &  U.S. Economic Data:

On Thursday stocks opened higher as investors digested a slew of economic data. China said its purchasing managers index (PMI) topped estimates in February. The index swelled to 51.0 which topped the Street’s estimate for 50.7 and January’s reading of 50.5. However, the final reading for the HSBC PMI was at 49.6, a touch higher than January’s reading of 48.8, but still under the boom/bust level of 50. Economic data in Europe was mixed. The Euro zone’s manufacturing sector contracted for the 7-consecutive month in February which increases the odds for the Euro Zone to fall into a recession later this year. The Markit’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 49.0 last month which matched estimates but remains below the boom bust line of 50. Meanwhile, yields for Spanish debt fell which is a small sight of optimism for the debt-laden nation.

Economic data in the U.S. was mixed. Jobless claims fell by 2,000 to 351,000 which bodes well for the rebounding jobs market. Personal income rose +0.3% vs +0.4% estimate while spending rose by +0.2%. On average, auto sales rose which is a net positive. Finally, the ISM MFG index unexpectedly fell to 52.4 which was the first decline in 3 months.

Market Outlook- Confirmed Rally

Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. At this point, all this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought so trade accordingly. As always, keep your losses small and never argue with the tape. 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!

 

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