Stocks Look Past Lousy Confidence Data

Tuesday, September 28, 2010
Stock Market Commentary:

The major averages ended higher as investors looked past the latest round of lackluster economic data. Volume totals were reported higher on the NYSE and on the Nasdaq exchange compared to Monday’s session which signaled large institutions were aggressively buying stocks. Advancers led decliners by over a 2-to-1 ratio on the NYSE and on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 70 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 68 issues that appeared on the prior session.

Stocks  Look Past Lousy Confidence Data:

Stocks spent the first half of the session trading in the red as investors digested the latest round of mixed economic data. At 9:00AM EST, the S&P Case-Shiller housing price index (HPI) was released which showed a modest uptick in home prices around the country. The news was good, not great. One hour later, stocks fell after consumer confidence plunged below estimates. The Conference Board’s consumer confidence index slid to 48.5, which was down from last month’s reading of 53.2. Despite the negative data, it was encouraging to see the benchmark S&P 500 index fall to a 1132 before the bulls showed up and defended support. Longstanding readers of this column know that 1131 was resistance for most of the summer and has now become near term support.

Market Commentary- Confirmed Rally:

The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong. Looking forward, the window is open for disciplined investors to carefully buy high-ranked stocks, while many pundits are expecting that markets may consolidate following recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) again today. The next level of support for the major averages is their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.

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