The Debt Waiting Game Continues

Tuesday, July 26, 2011
Stock Market Commentary:

Stocks were mixed for much of Tuesday as investors digested a slew of mixed earnings and economic data. It is very encouraging to see the Nasdaq 100 continue to lead its peers and remain perched near its 2011 high! Technically, it is encouraging to see the major averages find support and bounce off their respective 50 DMA lines in the middle of July. Looking forward, the next level of support are the 2011 lows/the 200 DMA lines and the next level of resistance are the 2011 highs.

Debt Deadline Approaches, Earnings & Economic Data Mixed:

On Tuesday, investors digested a slew of mixed earnings and economic data and continued to wait for a solution to the debt problem in D.C. Earnings news was mixed: NFLX, UPX, & MMM were among some of the large profile companies that fell after releasing their Q2 results. Alternatively, shares of BIDU, BRCM, & F traded higher after releasing their Q2 results.

Data on the Economic front was mixed to slightly positive. The S&P Case-Shiller index of U.S. home prices rose in May.  This was received well by the market and was the second consecutive monthly gain for domestic home prices. Meanwhile, a separate report showed that new-home sales slid -1% in June to an annual rate of 312,000. Economists like to see an average annual rate near 750,000 to be considered healthy. Finally, U.S. consumer confidence rose in July which bodes well for the economic recovery. The Conference Board said its index hit 59.5 in July which topped analyst estimates.

Market Outlook- Confirmed Rally

The last week of June’s strong action suggests the market is back in a confirmed rally. As our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests the rally is back in a confirmed rally as all the major averages are now flirting with fresh 2011 highs. Until all the major averages violate their respective 50 DMA lines on a closing basis, the market deserves the bullish benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.

 

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