Tuesday, April 6, 2010
Stocks opened lower after the Australian Central Bank raised interest rates for a 5th time by a quarter point to +4.25% and Greece rejected an EU-IMF aid package. The market’s internals remain healthy as this rally enters its 6th week since the March 1, 2010 follow-through day (FTD). It is also encouraging to see the major averages (and a slew of leading stocks) hold on to their gains after such a healthy advance.
Investors Digest News From All Corners Of The World:
Overnight, the Australian Central Bank raised interest rates for a 5th time since the March 2009 low to help curb their red hot economy. In Europe, the euro tanked (greenback rallied) after Greece denied an EU-IMF backed plan to help it recover from its worst financial crisis since WWII. Stateside, the Federal Reserve released the minutes of its latest meeting which showed a stronger, not weaker economic outlook. Looking forward, the next “big” news event will be Q1 earnings season which is slated to begin next Tuesday. So far, analysts believe that earnings will be positive as the eocnomy continues to recover from the worst financial crisis since the Great Depression.
Market Action- Confirmed Rally:
The benchmark S&P 500 Index currently has 4 distribution days while the Nasdaq Composite and Dow Jones Industrial Average have 3 since the March 1, 2010 follow-though-day (FTD). These distribution days have not been damaging, and normally it is considered healthy for the major averages to have less than 4 distribution days in a four week period. 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 proactively be buying high quality breakouts meeting the investment system guidelines. Trade accordingly.
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