Stocks and other risk assets edged higher on Monday after Ben Bernanke spoke before Monday’s open. 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. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 paused near its 2011 high (~1370) before moving higher and that level should now become support. The next level of support would be the 50 DMA line, then a deeper 5-9% pullback. That would bring the S&P 500 down to 1350-1280. It is important to note that the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
Bernanke Lifts Futures, Economic Data Mixed:
Before Monday’s open, Fed Chairman Bernanke gave a speech and made it clear that an “accommodative” policy (i.e. easy money from the Fed) is still needed to stimulate the global economy. He also said that the latest round of economic data suggests the job market is getting better but the underlying conditions remain far from normal. The Chicago Fed National Activity Index, which measures inflation and economic conditions in the Mid-West, slid to negative -0.9 in February from January’s revised plus 0.33 due to lower levels of production. In other news, the housing market continues to struggle as pending home sales fell -0.5% last month which missed the Street’s estimate for a +0.1% gain. Pending home sales measure how many contracts were signed in a given month.
Market Outlook- Confirmed Rally
Risk assets have begun pulling back which at this point is considered normal. The key going forward is to gauge the health of the pullback and see if the bulls are able to defend logical areas of support (recent chart lows and important moving averages). So far this action is considered healthy for the risk on trade. However, if sellers show up and support is breached then the bears will have regained control of this market. As always, keep your losses small and never argue with the tape. 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!
Coming Up This Week:
MONDAY: Pending home sales index
TUESDAY: S&P Case-Shiller home price index, consumer confidence, 2-yr note auction, Fed’s Rosengren speaks; Earnings from Lennar, Walgreen
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Fed’s Bullard speaks, FDA discusses obesity drugs
THURSDAY: GDP, jobless claims, corporate profits, Fed’s Plosser speaks, 7-yr note auction, farm prices, Fed’s Lacker speaks; Earnings from Best Buy, Research In Motion
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Stringer’s last day as Sony CEO
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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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.
Stocks Rally After Bernanke Says Easy Money Still Needed
Monday, March 26, 2012
Stock Market Commentary:
Stocks and other risk assets edged higher on Monday after Ben Bernanke spoke before Monday’s open. 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. Since then, stocks have been enjoying a very strong uptrend. The benchmark S&P 500 paused near its 2011 high (~1370) before moving higher and that level should now become support. The next level of support would be the 50 DMA line, then a deeper 5-9% pullback. That would bring the S&P 500 down to 1350-1280. It is important to note that the bulls remain in control of this market as long as the benchmark S&P 500 stays above its 50 DMA line.
Bernanke Lifts Futures, Economic Data Mixed:
Before Monday’s open, Fed Chairman Bernanke gave a speech and made it clear that an “accommodative” policy (i.e. easy money from the Fed) is still needed to stimulate the global economy. He also said that the latest round of economic data suggests the job market is getting better but the underlying conditions remain far from normal. The Chicago Fed National Activity Index, which measures inflation and economic conditions in the Mid-West, slid to negative -0.9 in February from January’s revised plus 0.33 due to lower levels of production. In other news, the housing market continues to struggle as pending home sales fell -0.5% last month which missed the Street’s estimate for a +0.1% gain. Pending home sales measure how many contracts were signed in a given month.
Market Outlook- Confirmed Rally
Risk assets have begun pulling back which at this point is considered normal. The key going forward is to gauge the health of the pullback and see if the bulls are able to defend logical areas of support (recent chart lows and important moving averages). So far this action is considered healthy for the risk on trade. However, if sellers show up and support is breached then the bears will have regained control of this market. As always, keep your losses small and never argue with the tape. 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!
Coming Up This Week:
MONDAY: Pending home sales index
TUESDAY: S&P Case-Shiller home price index, consumer confidence, 2-yr note auction, Fed’s Rosengren speaks; Earnings from Lennar, Walgreen
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Fed’s Bullard speaks, FDA discusses obesity drugs
THURSDAY: GDP, jobless claims, corporate profits, Fed’s Plosser speaks, 7-yr note auction, farm prices, Fed’s Lacker speaks; Earnings from Best Buy, Research In Motion
FRIDAY: Personal income & outlays, Chicago PMI, consumer sentiment, Stringer’s last day as Sony CEO
Source: CNBC.com
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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.
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