Stocks Quiet on Humphrey Hawkins Testimony

Wednesday, February 9, 2011
Stock Market Commentary:

Stocks end mixed as Fed Chairman Ben Bernanke began his semi-annual Humphrey Hawkins testimony to the US congress describing monetary policy and the state of the economy. It is encouraging to see leading stocks and the major averages continue to respond well to the recent slew of stronger-than-expected earnings that have been released. The fact that the major averages bounced back sharply after a very brief pullback illustrates how strong this 24-week rally actually is.

ECB- Germany Will Not Lend To Other EU Nations & Humphrey Hawkins Testimony:

On Wednesday, stocks were relatively quiet as investors digested the latest round of earnings and economic news. Axel Weber, the head of Germany’s Central Bank, said he will not run to succeed Jean-Claude Trichet as the head of the European Central Bank (ECB) and will not lend to other European countries. The report said Weber plans to resign as head of the German Central Bank and accept a position at Deutsche Bank AG, Germany’s largest bank.

In the U.S., Fed Chairman Ben Bernanke spent most of his day testifying to Congress. Bernanke said, “The job market has improved only slowly,” noting the economy had only made up just over 1 million of the more than 8 million jobs lost during the worst recession since the Great Depression. He also said, “This gain was barely sufficient to accommodate the inflow of recent graduates and other new entrants into the labor force and, therefore, not enough to significantly erode the wide margin of slack that remains in our labor market.”

Market Action- Confirmed Rally; Week 24

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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