The major averages ended higher which marked Day 1 of a new rally attempt as the market snapped a four day losing streak. Volume reported on the NYSE and the Nasdaq exchange fell on Wednesday compared to Tuesday’s levels which suggested large institutions were not aggressively buying stocks. Advancers led decliners by over a 4-to-3 ratio on the NYSE and by over an 8-to-5 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week highs on the NYSE but trailed on the Nasdaq exchange. There were 6 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, the same number that appeared on the prior session.
New Home Sales & Durable Goods Orders Are Weak:
Stocks opened lower after new home sales plunged to a record low and durable goods orders fell short of analyst estimates. The Commerce Department said new home sales unexpectedly slid last month to the lowest level on record which suggests the housing market remains very weak. Sales fell -12% from June to an annual pace of 276,000, the lowest level since data began in 1963! The report also showed that the median home price fell to $204,000 which was the lowest reading since late 2003. Meanwhile, durable goods orders, which are goods that are made to last at least three years, rose less than forecast in July. Durable goods orders rose +0.3%, which fell short of the +3% gain analysts had expected. Excluding transportation equipment, demand unexpectedly plunged -3.8% which is the largest monthly decline since January 2009 and lower than the Street’s forecast for a +0.5% increase.
Market Action- In A Correction:
Wednesday marked Day 1 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Monday’s negatively reversal coupled with Tuesday’s ugly distribution day effectively ended the latest rally attempt. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
Day 1 Of A New Rally Attempt
Monday, August 25 ,2010
Stock Market Commentary:
The major averages ended higher which marked Day 1 of a new rally attempt as the market snapped a four day losing streak. Volume reported on the NYSE and the Nasdaq exchange fell on Wednesday compared to Tuesday’s levels which suggested large institutions were not aggressively buying stocks. Advancers led decliners by over a 4-to-3 ratio on the NYSE and by over an 8-to-5 ratio on the Nasdaq exchange. New 52-week highs outnumbered new 52-week highs on the NYSE but trailed on the Nasdaq exchange. There were 6 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, the same number that appeared on the prior session.
New Home Sales & Durable Goods Orders Are Weak:
Stocks opened lower after new home sales plunged to a record low and durable goods orders fell short of analyst estimates. The Commerce Department said new home sales unexpectedly slid last month to the lowest level on record which suggests the housing market remains very weak. Sales fell -12% from June to an annual pace of 276,000, the lowest level since data began in 1963! The report also showed that the median home price fell to $204,000 which was the lowest reading since late 2003. Meanwhile, durable goods orders, which are goods that are made to last at least three years, rose less than forecast in July. Durable goods orders rose +0.3%, which fell short of the +3% gain analysts had expected. Excluding transportation equipment, demand unexpectedly plunged -3.8% which is the largest monthly decline since January 2009 and lower than the Street’s forecast for a +0.5% increase.
Market Action- In A Correction:
Wednesday marked Day 1 of a new rally attempt which means that the earliest a possible follow-through day (FTD) could emerge will be Monday. However, if at anytime, Wednesday’s lows are breached then the day count will be reset. The technical action in the major averages and the latest round of economic data bodes poorly for the market and the global recovery. Currently, resistance for the the major averages are their 50 DMA lines, then their longer term 200 DMA lines while support remains July’s lows. It is also disconcerting to see the action in several leading stocks remain questionable as evidenced by the dearth of high-ranked leaders breaking out of sound bases. Monday’s negatively reversal coupled with Tuesday’s ugly distribution day effectively ended the latest rally attempt. This emphasizes the importance of remaining cautious until the rally is back in a confirmed uptrend. Put simply, we can expect this sideways/choppy action to continue until the market breaks out above resistance or below support. The first scenario will have bullish ramifications while the second will be clearly bearish. Trade accordingly.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
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