25-Week Rally Begins

Monday, February 14, 2011
Stock Market Commentary:

Stocks were relatively quiet on Valentines Day. The major averages and leading stocks added to their 25-week rally which continues to show no signs of stopping. It is encouraging to see leading stocks and the major averages continue to respond well to the recent slew of stronger-than-expected earnings and economic data. The fact that the major averages bounced back sharply after a very brief pullback illustrates how strong this 24-week rally actually is.

China’s Exports Rise; Obama Cuts Deficit:

China’s exports surged last month which bodes well for the global economy. China said that exports vaulted +37.7% – more than double December’s rate  – to $150.7 billion. Stronger Chinese exports suggests consumer demand is rising as well. In the U.S., President Barack Obama proposed a budget that would cut the deficit by $1.1 trillion over the next 10 years. The White House said a $3.729 trillion budget in which the deficit rose to $1.645 trillion in fiscal 2011, then will fall sharply to $1.101 trillion in 2012.

Market Action- Confirmed Rally; Week 25 Begins

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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