Stocks rallied on Monday continuing the recent string of a strong start to the week before the bears show up and send stocks lower by Friday. Volume patterns have turned bearish recently which suggests large institutions are aggressively selling, not buying stocks. New 52-week highs still continue to outnumber new 52-week lows on the NYSE and on the Nasdaq exchange which is a welcomed sign.
Economic Data Is Healthy:
Stocks rebounded from a three-month low and marked Day 1 of a new rally attempt after a series of stronger than expected economic data points were released. Manufacturing reports in the US, Europe and China all showed that the global economic recovery is accelerating which helped allay concerns that it was running out of steam. The US dollar fell which helped a slew of dollar denominated assets (mainly stocks and commodities) rally. The Institute for Supply Management said that US manufacturing enjoyed its largest gain since August 2004 which was a welcomed sign.
Earnings Are Solid:
Exxon Mobil Corp (XOM) gapped higher after the oil giant said earnings fell less than expected because of higher oil prices and output. So far, nearly 80% of the companies that have reported earnings have topped estimates in the fourth quarter which, barring some unforeseen event, will snap a record nine-quarter earnings slump for the S&P 500. Analysts believe that earnings grew +76% in the last three months of 2009 as the global economy continues to rebound from its worst recession since WWII!
Market Outlook: In A Correction
Looking at the market, Monday marked Day 1 of a new rally attempt which means that as long as Monday’s lows are not breached, the earliest a possible follow-through day could emerge will be this Thursday. However, if Monday’s lows are taken out, then the day count will be reset and the chances for a steeper correction increase markedly. It is also important to see how the major averages react to their respective 50 DMA lines. Until they all close above that important level the technical damage remaining on the charts is a concern. Leading stocks have been acting poorly in recent weeks as the selling intensifies. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is key.
Professional Money Management Services – A Winning System – Inquire today! Our skilled team of portfolio managers knows how to follow the rules of this fact-based investment system. We do not follow opinion or the “conviction list” of some large Wall Street institution which would have us fully invested even during horrific bear markets. Instead, we remain fluid and only buy the best stocks when they are triggering proper technical buy signals. Our clients were 100% in cash from May 2008- May 2009 which helped us outperform 99% of our peers. If you are not completely satisfied with the way your portfolio is being managed, Click hereto submit your inquiry.*Accounts over $250,000 please. ** Serious inquires only, please.
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 February 1, 2010
Market Commentary:
Stocks rallied on Monday continuing the recent string of a strong start to the week before the bears show up and send stocks lower by Friday. Volume patterns have turned bearish recently which suggests large institutions are aggressively selling, not buying stocks. New 52-week highs still continue to outnumber new 52-week lows on the NYSE and on the Nasdaq exchange which is a welcomed sign.
Economic Data Is Healthy:
Stocks rebounded from a three-month low and marked Day 1 of a new rally attempt after a series of stronger than expected economic data points were released. Manufacturing reports in the US, Europe and China all showed that the global economic recovery is accelerating which helped allay concerns that it was running out of steam. The US dollar fell which helped a slew of dollar denominated assets (mainly stocks and commodities) rally. The Institute for Supply Management said that US manufacturing enjoyed its largest gain since August 2004 which was a welcomed sign.
Earnings Are Solid:
Exxon Mobil Corp (XOM) gapped higher after the oil giant said earnings fell less than expected because of higher oil prices and output. So far, nearly 80% of the companies that have reported earnings have topped estimates in the fourth quarter which, barring some unforeseen event, will snap a record nine-quarter earnings slump for the S&P 500. Analysts believe that earnings grew +76% in the last three months of 2009 as the global economy continues to rebound from its worst recession since WWII!
Market Outlook: In A Correction
Looking at the market, Monday marked Day 1 of a new rally attempt which means that as long as Monday’s lows are not breached, the earliest a possible follow-through day could emerge will be this Thursday. However, if Monday’s lows are taken out, then the day count will be reset and the chances for a steeper correction increase markedly. It is also important to see how the major averages react to their respective 50 DMA lines. Until they all close above that important level the technical damage remaining on the charts is a concern. Leading stocks have been acting poorly in recent weeks as the selling intensifies. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data. Remember that the recent series of distribution days coupled with the deleterious action in the major averages suggests large institutions are aggressively selling stocks. Disciplined investors will now wait for a new follow-through day to be produced before resuming any buying efforts. Until then, patience is key.
Professional Money Management Services – A Winning System – Inquire today!
Our skilled team of portfolio managers knows how to follow the rules of this fact-based investment system. We do not follow opinion or the “conviction list” of some large Wall Street institution which would have us fully invested even during horrific bear markets. Instead, we remain fluid and only buy the best stocks when they are triggering proper technical buy signals. Our clients were 100% in cash from May 2008- May 2009 which helped us outperform 99% of our peers. If you are not completely satisfied with the way your portfolio is being managed, Click here to submit your inquiry. *Accounts over $250,000 please. ** Serious inquires only, please.
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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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