Stocks and a slew of commodities bounced on Thursday as the world digested the latest round of economic data. Remember, it is quite normal to see markets “bounce” after a steep move in one direction. Going forward the key is to study the “bounce” and wait for a powerful up day (follow-through day) to confirm a new rally attempt. Thursday marked day 1 of a new rally attempt which means as long as Thursday’s lows are not breached the earliest a new rally can be confirmed will be on Tuesday. However, if Thursday’s lows are breached, then the day count will be reset. Ideally, the FTD will occur when the major averages are back above their respective 50 DMA lines. Until then, the bears remain in control of this market. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly as all the major averages and a slew of key commodities are down significantly from their May 2011 highs.
Jobless Claims Rise, U.S. Deficit Falls, & ECB Holds Rates Steady:
Before Thursday’s open, the Labor Department said U.S. jobless claims rose by 1,000 to 427,000 in the first week in June. The prior week’s reading was revised higher to 426,000. A separate report showed the U.S. trade deficit contracting in April to its lowest level of 2011. Exports jumped to a new high, thanks in part to a weaker dollar, and oil purchases plunged due to surging energy prices. The overall deficit fell -6.7% to $43.68 billion which fell short of the Street’s expectations. Elsewhere, the European Central Bank (ECB) decided to hold rates steady +1.25% for a second straight month which matched expectations. ECB President Jean-Claude Trichet said “strong vigilance” was needed to contain inflation. Many ECB pundits who like to read between the lines believe that this is Trichet’s way of hinting further rate hikes may be on the horizon.
Market Outlook- Market In A Correction:
From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and important upward trendlines. Since the beginning of May, we have urged our clients and readers to be extremely cautious as the major averages and a host of commodities began selling off.
For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. We have received a lot of “thank you” emails for being “spot on” in our cautious approach. We are humbled by your presence and very thankful for your continued support. Looking forward, the next level of resistance for the major averages is their respective 50 DMA lines then their 2011 highs. The next level of support is their longer term 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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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.
Day 1 Of A New Rally Attempt!
Thursday, June 09, 2011
Stock Market Commentary:
Stocks and a slew of commodities bounced on Thursday as the world digested the latest round of economic data. Remember, it is quite normal to see markets “bounce” after a steep move in one direction. Going forward the key is to study the “bounce” and wait for a powerful up day (follow-through day) to confirm a new rally attempt. Thursday marked day 1 of a new rally attempt which means as long as Thursday’s lows are not breached the earliest a new rally can be confirmed will be on Tuesday. However, if Thursday’s lows are breached, then the day count will be reset. Ideally, the FTD will occur when the major averages are back above their respective 50 DMA lines. Until then, the bears remain in control of this market. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly as all the major averages and a slew of key commodities are down significantly from their May 2011 highs.
Jobless Claims Rise, U.S. Deficit Falls, & ECB Holds Rates Steady:
Before Thursday’s open, the Labor Department said U.S. jobless claims rose by 1,000 to 427,000 in the first week in June. The prior week’s reading was revised higher to 426,000. A separate report showed the U.S. trade deficit contracting in April to its lowest level of 2011. Exports jumped to a new high, thanks in part to a weaker dollar, and oil purchases plunged due to surging energy prices. The overall deficit fell -6.7% to $43.68 billion which fell short of the Street’s expectations. Elsewhere, the European Central Bank (ECB) decided to hold rates steady +1.25% for a second straight month which matched expectations. ECB President Jean-Claude Trichet said “strong vigilance” was needed to contain inflation. Many ECB pundits who like to read between the lines believe that this is Trichet’s way of hinting further rate hikes may be on the horizon.
Market Outlook- Market In A Correction:
From our point of view, the market is back in a correction now that all the major averages closed below their respective 50 DMA lines and important upward trendlines. Since the beginning of May, we have urged our clients and readers to be extremely cautious as the major averages and a host of commodities began selling off.
For those of you that are interested, the S&P 500 hit a new 2011 high on May 2, 2011. Two days later, on Wednesday, May 4, 2011, we turned cautious and said “The Rally Was Under Pressure” (read here). Then on Monday, 5.23.11, we changed our outlook to “Market In A Correction” (read here). On Monday June 6, 2011 we pointed out that the S&P 500 violated its 9-month upward trendline (read here) and reiterated our cautious stance. We have received a lot of “thank you” emails for being “spot on” in our cautious approach. We are humbled by your presence and very thankful for your continued support. Looking forward, the next level of resistance for the major averages is their respective 50 DMA lines then their 2011 highs. The next level of support is their longer term 200 DMA lines. If you are looking for specific help navigating this market, please contact us for more information.
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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.
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