Wednesday, April 6, 2011
Stock Market Commentary:
Stocks rallied on Wednesday after stronger-than-expected economic data was released from Germany and gold surged to a fresh record high. It is encouraging to see a slew of leading stocks and the benchmark S&P 500, Dow Jones Industrial Average, Nasdaq composite, and small cap Russell 2000 index all close and stay above their respective 50 DMA lines since late March. The 28-week rally, which began on the September 1, 2010 follow-through day (FTD), ended on Thursday March 10, 2011 when all the major U.S. averages plunged below their respective 50 DMA lines in heavy trade. However, the correction was short lived when a new rally was confirmed on Thursday March 24, 2011′s healthy action. Since then, the action remains healthy which suggests the bulls are back in control of this market.
German Manufacturing Data Is Strong and Russell 2000 Hits New Record High!
Before Wednesday’s open, Germany, Europe’s strongest economy, said manufacturing data topped estimates which bodes well for the global recovery. German manufacturing rose +2.4% in February which easily topped the +0.5% increase expected on the Street. The stronger-than-expected data also helped the euro rally since the ECB is largely expected to raise rates when they meet on Thursday. The news helped the euro jump to its highest level since January 2010 and helped send other so-called risky assets to fresh post-recovery highs. The small-cap Russell 2000 index surged to a fresh all-time high which means that it has completely recovered from the 2008 bear market. Elsewhere, the Dow Jones Industrial Average rose to a fresh 2011 high which is another encouraging sign. A slew of commodities also hit fresh post-recovery highs led by Silver, Gold, and oil.
Market Action-Confirmed Uptrend
The market is back in a confirmed uptrend after a modest (and healthy) -6% correction from its post-recovery highs. We find it very bullish to see the mid cap S&P 400 index hit a fresh all time high and the small cap Russell 2000 index flirt with its all time high. in addition, the Dow Jones Industrial Average vaulted to a fresh post-recovery high and the S&P 500 and Nasdaq composite are just shy of fresh 2011 highs! Finally, we are very happy to see a slew of high ranked stocks trigger fresh technical buy signals in recent weeks which suggests higher, not lower prices lie ahead. If you are looking for specific help navigating this market, please contact us for more information.