Wednesday, January 12, 2011
Stock Market Commentary:
The major averages continued their week long rally after Portugal’s debt auction was successful and the latest round of economic and earnings data topped estimates. Heretofore, market internals remain healthy evidenced by broad leadership, favorable volume patterns, a rising advance/decline line, and a healthy number of new highs on both major exchanges.
Portugal’s Debt Sells & Economic Data Strong:
On Wednesday, Portugal’s debt auction was stronger than expected which helped allay concerns that the small European country will be the next inline for a bailout. Spain is scheduled to auction its debt on Thursday. Elsewhere, German GDP also topped estimates which bodes well for the global economic recovery. U.S. economic data was positive, the Labor Department said imports rose +1.1%, largely due to higher energy prices coupled with an improving economy. The report showed that import prices rose +0.3% excluding energy which suggests inflation remains contained. At 2pm EST, the Fed released its Beige book which mainly reiterated the recent consensus of an improving economy.
Market Action- Market In Confirmed Rally Week 20
It was encouraging to see the bulls show up in November and defend the major averages’ respective 50 DMA lines. 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. Put simply, stocks are strong. Trade accordingly. If you are looking for specific high ranked ideas, please contact us for more information.