Thursday, September 16, 2010
Stock Market Commentary:
Stocks spent most of the day in the red but closed mixed and near their intraday highs after a slew of economic data was released. Volume was reported even on the NYSE and lower on the Nasdaq exchange compared to Wednesday’s levels. Decliners led advancers by a 3-to-2 ratio on the NYSE and by an 8-to-5 on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 48 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 46 issues that appeared on the prior session.
UK Retail Sales & FedEx Dismal Forecast Hurt Stocks:
Stocks opened lower after the latest round of economic data suggests the economic recovery may be slowing. However, the bulls showed up and defended the major averages 200 DMA line for the fourth consecutive session. U.K. retail sales fell and FedEx Corp. (FDX -3.75%), the second-largest package-shipping company, lowered their profit forecasts which fell short of analyst estimates and bodes poorly for the economic recovery. FDX gapped down and sliced below its longer term 200 DMA line on Thursday as volume swelled. Meanwhile, a slew of housing stocks were smacked after home seizures surged to a record level.
Investors Digest: PPI, Jobless Claims, Philly Economic Index, and Poverty Rate:
In other news, the producer price index (PPI) rose +0.4%, topped estimates, and was the largest increase in five months. The reading was twice as large as July’s total. Core prices, which exclude food and energy rose +0.1%. Elsewhere, the Labor Department said, weekly jobless claims fell by -3,000 to +450,000 last week which was lower than the Street’s forecast for +459,000. Finally, the Federal Reserve Bank of Philadelphia released its general economic index which rose to negative -0.7 this month. It was much higher than August’s reading of -7.7. In a separate report, the government said that the country’s poverty rate vaulted to +14.3% in 2009 which was the highest level since 1994, and the 43.6 million Americans in need is the largest reading in 51 years of record-keeping! This translates to approximately 1 in 7 Americans are living in poverty.The fact that more people, not less, have fallen into poverty is another negative data point for the struggling recovery.
Market Action- Confirmed Rally:
Overall, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) remains healthy. Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. It was encouraging to see a flurry of high-ranked leaders trigger fresh technical buy signals and break out of sound bases in recent weeks. All the major averages rallied above their respective 200-day moving average (DMA) lines this week, which is another encouraging sign. The next important resistance level the major averages are facing is their respective summer highs.