Stocks & Commodities Rally As Dollar Falls

Thursday, November 18, 2010
Stock Market Commentary:

Stocks and commodities rallied as the dollar fell after Ireland’s central bank said it will accept an emergency loan from the ECB/IMF. The rally which began on the September 1, 2010 follow-through day ended on Tuesday as stocks and commodities plunged in heavy trade. Wednesday marked day 1 of a new rally attempt, which means the earliest a possible FTD could emerge will be Monday, November 22, 2010.

Euro Debt Woes Ease; GM Rallies, & US Economic Data Tops Estimates:

Overnight, Ireland’s central bank said it is prepared to accept emergency aid from the ECB and the IMF which helped the euro surge nearly 2 handles! The weaker dollar helped send a slew of dollar denominated assets higher (mainly stocks and commodities). Elsewhere, the much anticipated GM IPO was a huge success which also helped the market rally. On the economic front, the news was positive: Philly Fed Mfg data surged while jobless claims were slightly higher. The stronger economic data helped stocks rally and bodes well for the global recovery.

Market Action- 12 Week Rally Ends – In A Correction:

The 12-week rally ended on Tuesday, November 16, 2010 after the major averages plunged in heavy volume back down towards their respective 50 DMA lines. In recent weeks, we have repeatedly written about how the major averages were experiencing wide-and-loose action after a big move and made it very clear that that was not a healthy sign. At this point, we are looking for a new rally to be confirmed with a new follow-through day before taking any new positions. Caution and patience are key at this point. Trade accordingly.

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