Wednesday April 21, 2010
Market Commentary:

The major averages ended mixed after speculation spread that the international aid package will not be enough to help Greece avoid defaulting on its debt. Volume, an important indicator of institutional sponsorship, rose compared to Tuesday’s totals. Advancers led decliners by over 21-to-17 ratio on the NYSE and by a 14-to-13 ratio on the Nasdaq exchange. New 52-week highs still easily trumped new lows on both exchanges. There were 46 high-ranked companies from the Leaders List that made a new 52-week high and appeared on the BreakOuts Page, higher than the 37 issues that appeared on the prior session. A healthy crop of new leaders making new highs bodes well for any market rally, but that number abruptly contracted amid the latest bout of distribution.

Earnings, Earnings, & More Earnings!

Apple Inc. (AAPL +5.98%), Morgan Stanley (MS +4.04%), Mcdonalds Corp (MCD +0.03%), and Boeing Co (BA +3.85%) all traded higher after releasing solid quarterly results. Meanwhile, shares of Yahoo Inc. (YHOO -5.06%), Cree Inc. (CREE -7.24%), Wells Fargo & Company (WFC -2.02%), and AT&T (T -1.20%) fell after releasing their results. So far, over 106 companies in the benchmark S&P 500 have reported their Q1 results with just under 90% beating estimates.

This has been one of the strongest quarters in years which bodes well for the economic recovery. In addition, only 10 companies have missed estimates with two meeting estimates. Longstanding readers of this column know that we like to focus not only on the actual results but how the stock reacts to the numbers. It is important to keep that in mind as we continue to make our way through the heart of earnings season.

Greek Woes Shake Stocks:

The IMF, EU and Greece began talks to activate the 45 billion-euro ($61 billion) emergency aid package. The fiscal crisis is considered to be a “wake-up call” on sovereign-debt risks around the globe. For most of this year, investors have been concerned with the possibility of a Greek default but so far it has yet to occur.

Market Action- Confirmed Uptrend:

Remember, it is important to note that the major averages have been steadily rallying since early February and a pullback of some sort should be expected. The prior commentary’s observation, “Since the March 1, 2010 follow-though-day (FTD) a handful of distribution days has not been the least bit damaging to the market’s confirmed rally” – was immediately followed with the 6th distribution day for the S&P 500 Index. However, the fact that we have yet to see a modest pullback bodes very well for the bulls. Trade accordingly.

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