Stocks Quiet After ADP Report

Wednesday, March 02, 2011
Stock Market Commentary:

Stocks were relatively quiet on Wednesday after the ADP said U.S. employers added more jobs than expected last month. The current crisis in the Middle East remains in flux which is putting upward pressure on oil and gold and downward pressure on equities. The benchmark S&P 500 is up nearly 100% from its March 2009 low, and still about -16% off its all time high from October 2007. On average, market internals remain healthy as the major averages bounced after finding support near their respective 50 DMA lines in late February.

ADP Jobs Report Tops Estimates & Bernanke Continues Testifying:

Before Wednesday’s open, ADP, the country’s largest private payrolls firm, said U.S. employers added +217,000 new jobs in February which easily topped the revised +189,000 gain in January and February’s median estimate of +180,000. The Labor Department is scheduled to release February’s official jobs report before Friday’s open. Stocks opened higher but sold off after a television station in France said a Libyan airplane fired two missiles at a square in the town of Brega. This sent WTI crude higher (well over the psychologically important $100/barrel mark) and sent gold surging to a fresh all-time high.

Market Action- Rally Under Pressure; Week 27

It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November, January, and late February. From our point of view, the market remains in rally-mode 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 were a bit extended in recent months and this pullback (back to the 50 DMA lines) is very healthy as it shakes out the weaker hands and restores the the longer term health of this bull market. If you are looking for specific high ranked ideas, please contact us for more information.

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