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Economic Data Helps Stocks

Thursday, May 12, 2011
Stock Market Commentary:

Stocks and a host of commodities stopped falling after the latest round of economic data was released. Oil, silver, gold, and a host of other closely followed commodities fell after a brief rebound from last week’s week-long “Flash Crash.” From our vantage point, the market rally remains under pressure due to the lackluster action in the major averages and several leading stocks.

Producer Prices & Retail Sales Miss Estimates, Jobless Claims Fall

Before Thursday’s open, a slew of economic data was released. Producer prices rose 0.8% which topped the 0.6% estimate. Elsewhere, retail sales rose +0.5% which was just shy of the +0.6% estimate and suggests consumers are still having a tough time dealing with surging fuel prices. The Labor Department said jobless claimsslid by –44,000 last week to 434,000. Even though jobless claims fell for the week, the four-week average rose +4,000 to 436,750 which is not ideal. 

Market Outlook- Rally Under Pressure

From our point of view, the market rally is under pressure which suggests caution is paramount at this stage.  Looking forward, the next level of support for the major averages are their respective 50 DMA lines and resistance is their 2011 highs. The rally remains in tact as long as support holds. If you are looking for specific help navigating this market, please contact us for more information.

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Busy News Day; Quiet Reaction

Thursday, January 13, 2011
Stock Market Commentary:

The major averages were quiet on a rather busy news day. 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.

Bank of England & ECB Hold Rates Steady, Spain’s Debt Sells, U.S. Economic Data:

On Thursday, the Bank of England (BOE) & the European Central Bank  (ECB) held rates steady at record lows and reaffirmed their stimulus measures as the global economy continues to recover. The BOE said it is concerned that inflation is above the government’s +3% limit as it sits at a six-month high. Spain’s debt auction went well which helped allay concerns that the 10th largest economy will need to be bailed out in the near future. In The U.S, the producer price index (PPI)  rose +1.1% from November and topped the +0.8% estimate. Core prices, which exclude food and energy, rose +0.2% which matched estimates. Jobless claims rose to their highest level since October. Elsewhere, the U.S. trade deficit unexpectedly contracted in November to the lowest level in 10 months. The decline was due to faster growth in overseas markets coupled with a weak dollar which boosted demand for U.S. goods and services. The consumer price index, advance retail sales, consumer confidence, and industrial production are all slated to be released on Friday.

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.

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