Wednesday, January 11, 2012
Stock Market Commentary:
Stocks and a slew of other risk assets were mixed on Wednesday as the world awaits the European Central Banks (ECB) meeting on Thursday and continues to digest a slew of corporate earnings. From our point of view, the major averages confirmed their latest rally attempt on Tuesday 1.3.12 which was Day 9 of their current rally attempt. It was also encouraging to see the S&P 500 break above its downward trendline and its longer term 200 DMA line (shown above). Looking forward, the next area of resistance remains Q4’s highs (which is where the market is right now ~1292) and then 2011 highs near 1370. In addition, the bulls remain in control as long as the benchmark S&P 500 trades above its 200 DMA line.
Fed’s Beige Book & Earnings Continue Apace!
Stocks were mixed on Wednesday as the world awaited Thursday’s ECB meeting. In the U.S. a handful of companies released their Q4 results which largely met estimates. At 2pm EST, the Federal Reserve released its Beige Book which measures the economy at each branch in its 12 districts around the country. The Beige Book is released roughly two weeks before the next FOMC meeting and is used to gauge the overall health of the economy. The report showed that the U.S. economy grew albeit at a slower pace than Fed officials would like to see.
Market Outlook- New Rally Confirmed
Risk assets (stocks, FX, and commodities) have been acting better since the latter half of December. Now that the major U.S. averages scored a proper follow-through day the path of least resistance is higher. Looking forward, one can err on the long side as long as the benchmark S&P 500 remains above support (1260). Leadership is beginning to improve which is another healthy sign. Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!