Tuesday, March 06, 2012
Stock Market Commentary:
Stocks were under pressure as several global economic powerhouses reported weaker than expected GDP growth. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a very strong uptrend. However, the benchmark S&P 500 encountered resistance above its 2011 high (~1370) and is currently pulling back to consolidate its recent move. It would be perfectly normal and healthy to see a 5-9% pullback before a new leg higher begins. That would bring the S&P 500 down to 1310-1240. Until then, the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
Stocks Fall On Super Tuesday As Global Growth Slows:
Before Tuesday’s open, stock markets across the globe were under pressure as fear spread that the global economic recovery would slow materially. Brazil said its economy will grow by less than 3% in 2012 which was way below estimates. Fear spread that Europe will officially enter another recession and Greece will default on their debt. ICSC-Goldman Store Sales, which is an index that measures comparable same-store sales across the country, rose +1.3% in the first week of March. However, the year-on-year rate fell to +1.7%, from +2.7%. On the political front, the much awaited Super Tuesday finally arrived. It will be a pivotal day for the GOP, either solidifying Romney’s lead or causing a split within the already fragmented base.
Market Outlook- Confirmed Rally
Risk assets (stocks, FX, and commodities) have finally began to pullback which is considered normal as long as this pullback is mild and stops at logical levels of support (i.e. prior chart highs, 50 DMA line, etc). However, if the selling intensifes and support is breached then the bears will have regained control of this market. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!