Market In A Correction After U.S. Outlook Falls

Monday, April 18, 2011
Stock Market Commentary:

Stocks got smacked after Standard & Poor’s rating service cut the U.S. long term credit outlook to negative. The current rally which began on the Thursday, March 24, 2011 follow-through day (FTD) came under pressure at the beginning of April and officially ended on Monday, April 18, 2011, when all the major averages plunged below their respective 50 DMA lines in heavy trade. Now that the market is back in a correction, defense is paramount until a new FTD emerges.

S&P Rating Agency Cuts U.S. Credit Outlook To Negative

Before Monday’s open, the S&P rating service cut the U.S. long term credit outlook to negative which tends to serve as a warning shot before an official downgrade.  S&P put a “negative” outlook on the U.S. AAA credit rating, and said surging budget deficits and massive government debt were the primary culprits. This sent a slew of so-called “risk” assets lower as traders are fearful that the robust 8-month rally that began in late August may be in jeopardy. In other news, Citigroup (C) traded lower after releasing lackluster Q1 results.

Market Action- Market In A Correction

The current rally which began with the Thursday, March 24, 2011 FTD officially ended on Monday, April 18, 2011 after all the popular indexes sliced below their respective 50 DMA lines. The market is now in a correction which reiterates the importance of playing strong defense until a new rally is confirmed. If you are looking for specific help navigating this market, please contact us for more information.

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