Day 14: Stocks Close Below Resistance


Thursday, February 25, 2010
Market Commentary:

Stocks closed lower but off their intraday lows after the US dollar pulled back as concern eased over tepid economic data and the fate of the EU. Volume, a critical gauge of institutional demand, was higher than Wednesday’s totals which suggested large institutions were selling stocks. Decliners led advancers by a 10-to-9 ratio on the NYSE and by a 16-to-11 ratio on the Nasdaq exchange. New 52-week highs outnumbered new lows on both exchanges. There were 10 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, lower than the 14 issues that appeared on the prior session.

EU Fears & Tepid Economic Data Send Stocks Lower:

After a 7-week decline, the euro managed to positively reverse on higher volume than the prior session. If this nascent rally continues, it will bode well for dollar denominated assets; mainly stocks and commodities. The primary concern which sent the dollar soaring (euro plunging) in recent weeks was the risk of default from Greece, Spain and Portugal. On Thursday, fear spread after Moody’s Investors Service (MCO) said it may downgrade Greek debt.

Sour Economic Data Hurts Stocks:

In the US, stocks opened sharply lower after two disconcerting economic reports missed estimates. At 8:30am est, the Labor Department said initial jobless claims rose by +22,000 to +496,000 in the week ended Feb. 20 which was the highest level in three months. In a separate report, the Commerce Department said US durable goods excluding transportation equipment slid by -0.6% in January. This was the largest monthly decline since August and missed the Street’s estimate for a +1% increase.

Market Action- In A Correction:

Looking at the market, Thursday marked Day 14 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 king.

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