Investors Digest A Slew Of Economic Data


Thursday, March 18, 2010
Market Commentary:

The major averages traded between positive and negative territory for most of the day after the dollar rose and investors digested a slew of economic data. Volume totals were reported lower on the Nasdaq exchange and on the NYSE compared to the prior session. Decliners led advancers by more than a 22-to-15 ratio on the NYSE and by a 5-to-4 ratio on the Nasdaq exchange. There were 46 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, lower than the 77 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges.

Fed: To Raise, or Not To Raise, That Is The Question:

The dollar rallied after speculation increased that the Federal Reserve will raise its discount rate in the near future. The discount rate is the rate the Fed uses to charge banks for direct loans and was last raised after the market closed on Feb. 18, 2010. The Fed raised its discount rate by a quarter percentage point to +0.75% and said the move would encourage banks to rely more on money markets for short-term liquidity needs which would help stimulate the financial system.

Investors Digest A Slew of Economic Data:

Economic news was mixed: consumer prices were mild, leading economic indicators rose +0.1% last month while jobless claims slid. The Labor Department said weekly jobless claims dropped by -5,000 to 457,000 last week. Meanwhile, consumer prices were unchanged for the first time since March 2009. The Conference Board said the index of leading indicators rose +0.1% in February which was the 11th consecutive gain.   

Market Action- Confirmed Rally:

The fact that we have not seen any serious distribution days since the FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality stocks. Trade accordingly.

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