Stocks End Mixed on Mixed Economic Data


Tuesday, January 5, 2010
Market Commentary:

The major averages closed mixed after spending most of the session in the red as investors digested the latest round of mixed economic data. Volume, an important indicator of institutional sponsorship, was reported higher than Monday’s totals which indicated large institutions were not aggressively dumping stocks. Advancers led decliners on the NYSE but trailed by a small margin on the Nasdaq exchange. There were 58 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, lower than the total of 63 issues that appeared on the prior session. New 52-week highs solidly outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange.

Strong Manufacturing Data Helps Stocks

There were two important economic data points that were released today: factory orders and pending home sales. First, the good news, the Commerce Department said that factory orders in November rose +1.1% which more than doubled the Street’s estimate for a +0.4% increase. The stronger than expected report reiterated healthy manufacturing data released on Monday from both the US and China. The report showed that demand for steel, computers, and chemicals all remained strong which bodes well for the ongoing economic recovery.

Tepid Housing Data Hurts Stocks

Elsewhere, the National Association of Realtors said pending home sales plunged -16% in November which was the lowest reading since June and fell short of the Street’s lowest estimate. Pending home sales are defined as the number of buyers who agreed to purchase previously owned homes. A pending sale is one in which a contract was signed, but not closed. It is important to note that the index is used as a leading indicator of existing home sales, not new home sales. The mixed economic data made it difficult for investors to ascertain the health of the economy. That said, many investors are still waiting for the December’s official jobs report which is slated to be released before Friday’s opening bell.

Market Action- Price & Volume Remains Healthy

Stocks remain strong as they managed to brush off the negative housing data and close near their intraday highs on Tuesday. The current rally is in the middle of it 44th week (since the March 2009 lows) and on all accounts looks strong. In addition, most bull markets last for approximately 36 months so the fact that we are beginning our 10th month suggests we have more room to go. The Dow Jones Industrial Average, small cap Russell 2000 Index, S&P 500 Index and Nasdaq Composite and NYSE Composite indices are all trading near their respective 2009 highs which also bodes well for this rally. Leadership is beginning to expand which is a welcomed sign and ideally it will continue to expand over the next few weeks as the major averages continue advancing.


Here are more articles you may like

Claim Your Free Guide Today

Give us your email and we will give you the tools to change your life. 


Learn about Early Entry Points & much more...

© ChartYourTrade | Contact us:

Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.

Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.

Terms of Service