The 24-Week Rally Is Alive & Well

Monday, February 7, 2011
Stock Market Commentary:

Stocks rallied on Monday as investors digested a slew of stronger-than-expected earnings data and the latest round of M&A news. The fact that the major averages bounced back sharply after a very brief pullback illustrates how strong this 24-week rally actually is.

Strong Start To The Week!

Stocks rose on Monday after a confluence of healthy data set the stage for another strong week. India said it expects its red-hot economy to enjoy its strongest annual rate of growth in nearly three years as the global economic recovery continues apace! Elsewhere, in Asia, Indonesia said its economy grew at the fastest pace in six years which bodes well for the Asia growth theme and the global recovery. Investor sentiment improved in Egypt as existing politicians took steps to resolve the 3-week crisis. The latest estimates show that Q4 earnings season was strong with nearly +90% of the companies in the S&P 500 which reported earnings beat or matched expectations while around 10% missed.

Market Action- Confirmed Rally; Week 24

It was encouraging to see the bulls show up and defend the major averages’ respective 50 DMA lines in November as this market proves resilient and simply refuses to go down. From our point of view, 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. If you are looking for specific high ranked ideas, please contact us for more information.

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