FedEx & Healthy Housing Data Lift Stocks


Monday, July 26, 2010
Stock Market Commentary:

The major averages ended higher on Monday after FedEx Corp. (FDX) reported solid results, raised their 2010 outlook and a positive report from the troubled housing sector was released. Volume, an important indicator of institutional sponsorship, was reported lower than Friday’s totals on the NYSE and Nasdaq exchange. Advancers trumped decliners by a 3-to-1 ratio and new 52-week highs easily outnumbered new 52-week lows on both major exchanges. There were 64 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, higher from the 39 issues that appeared on the prior session.

FedEx, New Home Sales & Sentiment All Help Lift Stocks:

Before Monday’s open, FedEx raised their 2010 outlook and said earnings soared +108% while sales grew by +20% last quarter. The second largest package-delivery company’s shares gapped up on monstrous trade as investors welcomed the positive news. Normally, transportation stocks are a good proxy for general economic activity. Therefore, the fact that earnings soared last quater bodes well for the ongoing global recovery. 

Elsewhere, the Commerce Department said new home sales topped estimates and rose in June, following an unprecedented decline in the previous month. New home sales rose by +24% from May to an annual pace of 330,000. The market has rebounded nicely over the past few weeks after investor sentiment fell to the lowest level since July 2009. The American Association of Individual Investors’ ratio of bullish to bearish respondents fell to 0.68 (four week average) which normally corresponds with countertrend rallies. The converse is also true, market’s tend to pullback when the survey becomes too bullish.

Market Action- Confirmed Rally:

It was encouraging to see the major averages continue rallying after breaking above their their respective 2-month downward trendlines and their respective 50-day moving average (DMA) lines on Friday. It was also healthy to see the benchmark S&P 500 close above its 200 DMA line which is another healthy sign. At this point, the window remains open for for high ranked stocks to be accumulated when they trigger fresh technical buy signals. If you are interested in learning more, feel free to contact us for a full list of high ranked candidates. Trade accordingly.

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