SPX Pulling Back After Encountering Resistance Near 2011's High
Monday, March 05, 2012 Stock Market Commentary:
Stocks were under pressure across the globe after China lowered its GDP forecast to 7.5% for 2012. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a very strong uptrend. However, the benchmark S&P 500 encountered resistance above its 2011 high (1370) and is currently pulling back to consolidate its recent move. It would be perfectly normal and healthy to see a 5-9% pullback before a new leg higher begins. That would bring the S&P 500 down to 1310-1240. Until then, the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
China Slows Down; Threatens Global Recovery, E.U. & U.S. Economic Data Tops Estimates:
Before Monday’s open, China lowered its 2012 GDP figures to an 8-year low of 7.5% which sent a slew of risk assets (mainly stocks and commodities) lower across the globe. For the better part of the last decade China’s economy has been one of the strongest in the world, especially after the 2008-2009 financial crisis. Therefore, if China’s economy begins to slowdown and we get another “shock” to the global economy, the ongoing (and fragile) global recovery could be in real jeopardy. In Europe, retail sales snapped a four month losing streak, topped estimates, and unexpectedly rebounded in January. Sales rose +0.3%from December, after falling by half a percentage point at the end of 2011. Economic data in the U.S. topped estimates. The ISM’s service index rose to 57.3 last month which topped estimates and was above the boom/bust line of 50. The Commerce Department said factory orders slid -1% in January which was the largest decline in over a year but still came in above estimates for a decline of -1.5%.
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.
China Slows Down; Threatens Global Recovery
Monday, March 05, 2012
Stock Market Commentary:
Stocks were under pressure across the globe after China lowered its GDP forecast to 7.5% for 2012. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. Since then, stocks have been enjoying a very strong uptrend. However, the benchmark S&P 500 encountered resistance above its 2011 high (1370) and is currently pulling back to consolidate its recent move. It would be perfectly normal and healthy to see a 5-9% pullback before a new leg higher begins. That would bring the S&P 500 down to 1310-1240. Until then, the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
China Slows Down; Threatens Global Recovery, E.U. & U.S. Economic Data Tops Estimates:
Before Monday’s open, China lowered its 2012 GDP figures to an 8-year low of 7.5% which sent a slew of risk assets (mainly stocks and commodities) lower across the globe. For the better part of the last decade China’s economy has been one of the strongest in the world, especially after the 2008-2009 financial crisis. Therefore, if China’s economy begins to slowdown and we get another “shock” to the global economy, the ongoing (and fragile) global recovery could be in real jeopardy. In Europe, retail sales snapped a four month losing streak, topped estimates, and unexpectedly rebounded in January. Sales rose +0.3%from December, after falling by half a percentage point at the end of 2011. Economic data in the U.S. topped estimates. The ISM’s service index rose to 57.3 last month which topped estimates and was above the boom/bust line of 50. The Commerce Department said factory orders slid -1% in January which was the largest decline in over a year but still came in above estimates for a decline of -1.5%.
Market Outlook- Confirmed Rally
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December and are extended by any normal measure. At this point, all this means is that the odds for a pullback increase. However, markets can very easily go from overbought to extremely overbought so trade accordingly. As always, keep your losses small and never argue with the tape. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!
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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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