Wednesday, December 29, 2010
Stock Market Commentary:
The recent tight trading range continued on the major averages with only two trading days left in 2010. Heretofore, market internals remain healthy evidenced by broad leadership, favorable volume patterns, a rising advance/decline line, and a healthy number of new highs on both major exchanges.
Predictions, Predictions, & More Predictions:
Stocks edged higher on Wednesday on a very quiet news day. It is important to note that nearly every analyst on Wall Street now believes that stocks will rally in 2011. Normally, this is an ominous sign, considering the crowd is usually wrong. However, the one caveat is that the Federal Reserve is pumping trillions of dollars into the system (i.e. QE I & II) which is something that can not be ignored. From our perspective, we do not like to predict market action, instead we remain objective and interpret what happens in real time. That said, the bulls are clearly in control of this market and until that changes, you know where we stand.
Market Action- Market In Confirmed Rally Week 18
It is encouraging to see the bulls show up in November and defend the 50 DMA lines for the major averages. The market remains in a confirmed rally until those levels are breached. The tech-heavy Nasdaq composite and small-cap Russell 2000 indexes continue to lead evidenced by their shallow correction and strong recovery. However, it is important to note that stocks are a bit extended here and a pullback of some sort (back to the 50 DMA lines) would do wonders to restore the health of this bull market. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.