Soft Retail Sales & Blasé Fed Minutes Weigh On Stocks


Tuesday, July 14, 2010
Stock Market Commentary:

The benchmark S&P 500 index snapped a six day rally after retail sales fell last month and the Fed released the minutes of its latest meeting. Volume, a critical component of institutional sponsorship, was lower on the Nasdaq and the NYSE. There were 28 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, higher than the 23 issues that appeared on the prior session. Decliners led advancers by a 20-to-17 ratio on the NYSE and a 3-to-2 ratio on the Nasdaq exchange. Finally, new 52-week highs outnumbered new 52-week lows on the NYSE and the Nasdaq exchange.

Retail Sales & Fed Minutes Disappoint:

The Commerce Department said retail sales fell -0.5% last month which topped the Street’s estimate and followed a -1.1% decline in May. Most of the decline came from the ailing automobile sector, excluding auto dealers, demand fell -0.1% which matched the median estimate. Elsewhere, the Federal Reserve released the minutes of its latest meeting which showed a less than stellar economic outlook. Fed officials said their economic outlook has “softened” which sparked concern of a double dip recession.

Market Action- Confirmed Rally:

Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. Remember to remain very selective because most of the major averages are still trading below their downward sloping 50 and 200 DMA lines. It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.

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