Monday, September 19, 2011
Stock Market Commentary:
Stocks snapped their longest winning streak since July after fresh fear regarding a Greek default resurfaced over the weekend. The major averages continued trading between support and resistance of their current base but most European markets are still near their 2011 lows. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.
Greek Fears Dominate The Headlines- Again
Over the weekend, fears reemerged that Greece would default which hammered global equity markets on Monday. On Monday, European Union and International Monetary Fund inspectors were scheduled to hold a teleconference with Greece’s Finance Minister Evangelos Venizelos to determine whether or not the government is eligible for an aid payment due next month. The second bailout package will be held by EU leaders on July 21. This snapped a 5-day rally for most stock markets around the world which was the longest consecutive rally since July.
Market Outlook- Rally Under Pressure:
The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.