Q1 Earnings Season Begins; Stocks Edge Higher


Monday, April 12, 2010
Market Commentary:

The major averages ended higher after Greece received an international aid pledge to help it get through its worst financial crisis since WWII. Volume totals on the NYSE and on the Nasdaq exchange were reported mixed; lower on the NYSE and slightly higher on the Nasdaq exchange compared to Friday’s totals. Breadth was positive as advancers led decliners by a 11-to-8 ratio on the NYSE and by a 5-to-4 ratio on the Nasdaq exchange. New 52-week highs trumped new lows on both exchanges yet again. There were 61 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher from the 48 issues that appeared on the prior session.  A healthy crop of new leaders making new highs bodes well for any market rally, so the recent expansion in leadership has been a welcome post-holiday improvement. 

Euro Surges On Greek Bailout Hopes:

Over the weekend, Greece received a promise of as much as 45 billion euros ($61 billion) in loans from the EU and International Monetary Fund to help the troubled nation remain solvent and avoid a default. The euro surged on the news helping offset some of the recent losses. In the US, the Dow Jones Industrial Average closed above 11,000 and the S&P 500 approached the psychologically important 1200 level for the first time since September 2008 (when Lehman failed).

Q1 Earnings Season Begins!

After the close, Alcoa Inc. (AA) kicked off Q1 earnings season and reported a narrower Q1 loss, citing improving demand. Analysts believe that combined profit for S&P 500 companies will jump +30% from Q1 2009. Remember that companies will begin reporting Q1 earnings in droves over the next few weeks and it is imperative for investors to not only pay attention to the results but how the stock reacts to its earnings. 

Market Action- Confirmed Rally:

The benchmark S&P 500 Index currently has 5 distribution days while the Nasdaq Composite and Dow Jones Industrial Average have 4 since the March 1, 2010 follow-though-day (FTD). These distribution days have not been damaging which is a welcomed sign. Trade accordingly.

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