Wednesday, January 5, 2011
Stock Market Commentary:
The major averages rallied on Wednesday after the latest stronger-than-expected economic data easily topped estimates. 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.
ADP’s Jobs Report & ISM Service Index Easily Top Estimates:
Before Wednesday’s open, ADP, the country’s largest private payrolls company, said US employers added +297,000 new jobs in December which was three times stronger than the Street’s estimate. After the open, the Institute for Supply Management (ISM) released its service index which surged to the highest level since May 2006! The service sector currently accounts for over two-thirds of the economy. The non-factory index, vaulted to +57.1, easily topping the median forecast and November’s reading of 55. This news is the latest in a series of stronger than expected economic data which bodes well for the global economic recovery.
Market Action- Market In Confirmed Rally Week 19
It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. 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.