Stocks Edge Higher As Earnings Season Begins


Tuesday, April 13, 2010
Market Commentary:

The major averages opened lower and closed slightly higher after Alcoa Inc. (AA) kicked off earnings season with lackluster results and a survey showed small business owners are still pessimistic about the economic recovery. Volume totals on the NYSE and on the Nasdaq exchange were reported higher when compared to Monday’s totals. Advancers were about even with decliners on the NYSE and Nasdaq exchange as the major averages spent the session trading between positive and negative territory. New 52-week highs trumped new lows on both exchanges yet again. There were 46 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, lower from the 61 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.

Earings Season Begins & Stocks Begin Reacting:

After opening lower, the major averages turned positive in the early afternoon as investors looked past Alcoa’s disappointing results and the ominous survey from small business owners. The S&P 500 vaulted over +77% from a 12-year low in March 2009 after the economy bottomed and the Federal Reserve held rates near historic lows to spur economic growth. Until we get a clear undertanding on how companies fared last quarter one could easily expect this sloppy/sideways action to continue.

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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