Stocks End Lower on Weaker Economic Data


Thursday, August 5, 2010
Stock Market Commentary:

The major averages slid after weekly jobless claims unexpectedly jumped and retail sales fell short of estimates. Volume totals were reported mixed; higher on the NYSE and lower on the Nasdaq exchanges versus the prior session. Decliners led advancers by almost an 11-to-8 ratio and the NYSE and by a 17-to-9 ratio on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and the Nasdaq exchange. There were 24 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, lower from the 35 issues that appeared on the prior session.

Jobless Claims Rise & Retail Sales Are Light:

Before Thursday’s open, the Labor Department said initial jobless claims rose by +19,000 to 479,000 which is the highest reading since April and topped analysts estimates. Before Friday’s open, the Labor Department is slated to release July’s nonfarm payrolls report which is expected to decline by -65,000. Analysts believe that Friday’s report will show the unemployment rate rose to +9.6%. Elsewhere, a slew of retailers reported sales which fell short of the Street’s estimates for July. This put pressure on the market and a slew of retailers as we enter the back-to-school shopping season.

Market Action- Confirmed Rally:

At this point, the Dow Jones Industrial Average and the NYSE Composite Index have traded above resistance at their long term 200-day moving average (DMA) lines and recent chart highs. The tech-heavy Nasdaq Composite, benchmark S&P 500, and small-cap Russell 2000 index remain slightly below their recent chart highs. However, the fact that all of the major averages are trading above their respective 2-month downward trendlines bodes well for this five week rally. In order for a new leg higher to begin, all the major averages must close and remain above their respective resistance levels. Remember that the window remains open for for high-ranked stocks to be accumulated when they trigger fresh technical buy signals. Trade accordingly.

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