Day 13: Stocks Rally On Lighter Volume


Wednesday, February 24, 2010
Market Commentary:

The major averages rallied on the 13th day of the current rally attempt however volume, a critical gauge of institutional demand, fell compared to Tuesday’s totals. The lighter volume behind today’s advance signals large institutions are not aggressively buying stocks. Advancers led decliners by nearly a 3-to-1 ratio on the NYSE and by nearly a 2-to-1 ratio on the Nasdaq exchange. New 52-week highs outnumbered new lows on both exchanges. There were 14 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, higher than the 10 issues that appeared on the prior session.

Bernanke Testifies; Stocks Advance:Federal Reserve Chairman Ben S. Bernanke spent the day testifying on Capital Hill. His comments helped send stocks higher and the dollar lower after he said the central bank will keep interest rates low to ensure the economy continues to recover. Bernanke told Congress that the Fed will eventually need to tighten monetary policy however we are still in the “nascent” stages of the economic rebound which still requires low interest rates for an extended period. This helped allay concerns that the Fed will begin raising rates more aggressively after last week’s surprise discount rate hike. The Fed has left its federal funds rate, the rate banks charge each other for overnight loans, at a record low near zero for more than 14 months as the economy continues to recover.

Poor Home Sales & The Jobs Bill:

Elsewhere, it was disconcerting to see US home sales unexpectedly drop to a record low. The tepid reading illustrates how weak this recovery actually is. In Washington D.C., the Senate approved a $15 billion plan to give companies tax breaks for hiring people. The Senate passed the jobs bill today by 70-28. The bill will now make its way to the House where Democratic leaders must decide whether to pass it without changes or to try to merge it with a $150 billion jobs bill it approved in December.

Market Action- In a Correction:

Looking at the market, Wednesday marked Day 13 of a new rally attempt which means that as long as the February 5th lows are not breached the window remains open for a new follow-through day (FTD) to emerge. A new follow-through day will confirm the current rally attempt and will be produced when one of the major averages rallies at least +1.7% on higher volume than the prior session as a new batch of leaders break out of fresh bases. However, if the February 5, 2010 lows are breached then the day count will be reset and a steeper correction may unfold. So far, the market’s reaction has been tepid at best to the latest round of economic and earnings data which remains a concern. Remember that the market remains in a correction until a new new follow-through day emerges. Until then, patience is paramount.

Professional Money Management Services – Inquire today!
Our skilled team of portfolio managers follow the rules of this fact-based investment system without exception. We do not follow opinion trade based on what we think will happen. Instead, we trade on what actually “is” happening! We remain fluid in our approach and only buy the best stocks when they are triggering proper technical buy signals. If you are not completely satisfied with the way your portfolio is being managed, Click here to email one of our portfolio managers. *Accounts over $250,000 please.  ** Serious inquires only, please.


Here are more articles you may like

Claim Your Free Guide Today

Give us your email and we will give you the tools to change your life. 


Learn about Early Entry Points & much more...

© ChartYourTrade | Contact us:

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.

Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.

Terms of Service