Tuesday, March 13, 2012
Stock Market Commentary:
Stocks rallied on Tuesday as investors digested a slew of data from across the globe. 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 paused near its 2011 high (~1370) before moving higher. It would be perfectly normal and healthy to see a 5-9% pullback at any point to give the bulls a chance to consolidate the recent gain. That would bring the S&P 500 down to 1310-1250. Until then, the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
Healthy News From Europe & The U.S., Fed Stays Firm:
Before Tuesday’s open, Germany said its ZEW survey for March, which measures economic expectations, surged to 22.3 which easily topped the Street’s estimate for 10. The U.K.’s trade deficit widened slightly but still came in short of estimates for January. The real surprise was that exports to non-European Union countries rose to the highest level in history! Investors were also comforted when euro-zone finance ministers discussed the authorization of the first tranche of Greece’s second bailout which helped allay fears of further complications.
On average economic data in the U.S. was also stronger than expected. The warmer weather across the nation helped retail sales jump to the fastest rate in five months in February. Retail sales rose +1.1% from January which matched expectations. Meanwhile, the National Federation of Independent Business’ small-business optimism index increased for the sixth consecutive month to the highest level since December 2007! A separate report showed that business inventories rose by 0.7% which was the largest increase since October. Finally, the Fed concluded its latest meeting, held rates steady and largely reiterated their recently stated cautious but optimistic stance regarding the economy.
Market Outlook- Confirmed Rally
After a very shallow pullback the majority of risk assets (stocks, FX, and commodities) have began to rally after a normal pullback. So far this action is considered healthy. However, if the sellers show up and support is breached then the bears will have regained control of this market. 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!