Stocks rallied as the US dollar fell and the latest round of economic and earnings data hit the wires. Volume patterns remain healthy as the major averages continue their 8-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks. It is also encouraging to see, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.
Economic Data Is Mixed:
Before Monday’s opening bell, US industrial production unexpectedly fell -0.2% last month which fell short of the small gain expected on Wall Street. At 10:00 AM EST, US homebuilder confidence rose in October to the highest level in four months which was a welcomed sign for the ailing housing market. The National Association of Home Builders/Wells Fargo confidence index rose to +16 which topped estimates and exceeded the prior month’s reading of 13.
Q3 Earnings Top Estimates:
Citigroup (C) jumped over +3% after the company said earnings rose +$0.07 compared to a loss of –$0.07 in the same period last year. After Monday’s close, International Business Machines (IBM) and Apple Inc. (AAPL) are slated to release their Q3 results. Both stocks have enjoyed double digit percent gains since the September 1, 2010 follow-through day (FTD). Looking forward, twelve members of the 30-stock Dow Jones Industrial Average are scheduled to post Q3 earnings this week. Accordingly to Bloomberg.com (so far) over +75% of companies in the S&P 500 index that have reported their Q3 results, beat estimates
Market Action- Confirmed Rally Week 8:
The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.
Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world.For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.
Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.
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 As Dollar Falls
Monday, October 18, 2010
Stock Market Commentary:
Stocks rallied as the US dollar fell and the latest round of economic and earnings data hit the wires. Volume patterns remain healthy as the major averages continue their 8-week rally. Healthy volume patterns are important because they suggest large institutional investors are aggressively buying, not selling, stocks. It is also encouraging to see, market internals remain healthy evidenced by an upward sloping Advance/Decline line and the fact that new 52-week highs continue to easily outnumber new 52-week lows on both exchanges.
Economic Data Is Mixed:
Before Monday’s opening bell, US industrial production unexpectedly fell -0.2% last month which fell short of the small gain expected on Wall Street. At 10:00 AM EST, US homebuilder confidence rose in October to the highest level in four months which was a welcomed sign for the ailing housing market. The National Association of Home Builders/Wells Fargo confidence index rose to +16 which topped estimates and exceeded the prior month’s reading of 13.
Q3 Earnings Top Estimates:
Citigroup (C) jumped over +3% after the company said earnings rose +$0.07 compared to a loss of –$0.07 in the same period last year. After Monday’s close, International Business Machines (IBM) and Apple Inc. (AAPL) are slated to release their Q3 results. Both stocks have enjoyed double digit percent gains since the September 1, 2010 follow-through day (FTD). Looking forward, twelve members of the 30-stock Dow Jones Industrial Average are scheduled to post Q3 earnings this week. Accordingly to Bloomberg.com (so far) over +75% of companies in the S&P 500 index that have reported their Q3 results, beat estimates
Market Action- Confirmed Rally Week 8:
The action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been very strong and stocks are simply pausing to consolidate their recent gains. It was encouraging to see the bulls show up and defend support (formerly resistance) in recent weeks. The next level of support for the major averages is their September highs, then their respective 200-day moving average (DMA) lines while the next level of resistance is their respective April highs. Trade accordingly.
Want Better Results?
Our Private Advisory Services Can Help You!
Sarhan Consulting provides both global macro and equity only consulting services to institutional clients around the world. For years, its clientele has participated in the firm’s objective market-based outlook, which has one primary goal: to provide stable trading ideas across all asset classes.
Sarhan Capital’s consulting arm allows clients to participate in the idea generation process and be privy to many of Sarhan’s best ideas long before they are highlighted in other publications. In addition, clients receive objective feedback on their own ideas and are alerted each time Sarhan Capital traders buy and sell. Many institutional clients including hedge funds, private family offices, brokerages, registered investment advisers, and corporations, have turned to Sarhan Capital for personalized advisory/consulting services in recent years.
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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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