Stocks Fall As Rally Cools

Tuesday, May 03, 2011
Stock Market Commentary:

Stocks slid as investors digested the last two weeks of solid gains and patiently await Friday’s much anticipated non-farm payrolls report. The market is back in a confirmed uptrend and remains healthy as long as all the major averages continue trading above their respective 50 DMA lines and recent chart highs. The recent healthy action was in response to a very accommodative Fed, a series of stronger than expected Q1 results, and a host of solid economic data. Now that the market is back in a confirmed rally, odds favor higher, not lower, prices lie ahead.

Factory Orders Rise; Earnings Mixed To Strong:

On Tuesday, stocks slid as the latest rally cooled and investors digested the latest round of earnings and economic data. U.S. factory orders topped estimates in March as demand increased for machinery and computers which bodes well for the economic recovery and further business spending. The Commerce Department said factory orders rose +3%, a fifth consecutive increase, after a +0.7% gain in February. Meanwhile, the latest round of earnings data was mixed to slightly stronger which also bodes well for the ongoing recovery.

Market Outlook- Market In A Confirmed Rally

From our point of view, the market is back in “rally-mode” as all the major averages continue to trade above their respective 50 DMA lines and recent chart highs. However, we would be remiss not to note that a slew of  leading stocks suffered heavy distribution on Tuesday which is not ideal. If you are looking for specific help navigating this market, please contact us for more information.

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