Stocks End Lower On Lackluster Economic Data


Wednesday, July 28, 2010
Stock Market Commentary:

The major averages fell on Wednesday after durable goods fell and the Fed Beige Book showed the economic recovery has slowed. However, it was encouraging to see volume, an important indicator of institutional sponsorship, decline on the NYSE and the Nasdaq exchange compared to Tuesday’s level. Decliners led advancers by over a 2-to-1 ratio on the NYSE and on the Nasdaq exchange while new 52-week highs outnumbered new 52-week lows on both major exchanges. There were only 14 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, down from the 59 issues that appeared on the prior session.  The recent signs of expanding leadership bode well for the current confirmed rally.

Tepid Economic Data Weighs On Stocks:

The major averages ended lower after the Commerce Department said durable goods unexpectedly fell last month. Goods that are built to last at least three years fell -1% compared to the Street’s estimate of a +1% increase. At 2:00pm EST, the Fed published its Beige Book which summarizes economic conditions at 12 districts around the country. The report showed that the economic recovery slowed in some districts while other districts held steady. Growth held steady in Cleveland and Kansas City, but slowed in Chicago and Atlanta. Other areas showed modest economic conditions. The primary culprit for the lackluster reading was high unemployment which adversely affects consumer spending, a primary driver of the US economy.

Market Action- Confirmed Rally:

It was encouraging to see the major averages continue rallying after breaking above their their respective 2-month downward trendlines and their respective 50-day moving average (DMA) lines. However, the Dow Jones Industrial Average and the NYSE composite have stalled near their prior chart highs which is their next logical area of resistance. At this point, the window remains open for for high ranked stocks to be accumulated when they trigger fresh technical buy signals. If you are interested in learning more, feel free to contact us for a full list of high ranked candidates. Trade accordingly.

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