Stocks Rally On Healthy Economic Data

Facebook
Twitter
LinkedIn

Thursday, July 8, 2010
Stock Market Commentary:

The major averages rallied one day after posting a new follow-through day (FTD). Volume, a critical component of institutional sponsorship, fell short of Wednesday’s levels while advancers trumped decliners on the NYSE and Nasdaq exchange. However, there were only 9 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, higher than the 7 issues that appeared on the prior session. Meanwhile, new 52-week lows outnumbered new 52-week highs on the Nasdaq but trailed on the NYSE. It will be critically important for leadership to expand if the new rally effort will prove to be a sustained market advance. If not, Wednesday’s strong move may turn out to be the latest in a string of failed rallies confirmed with follow-through days.

Healthy Economic Data Lifts Stocks:

There were two positive economic data points which helped send stocks higher on Thursday: jobless claims fell and same store sales rose at several key retailers. The Labor Department said initial jobless claims fell by -21,000 to 454,000 last week. This was lower than the Street’s forecast for a decline to 460,000 from an initially reported 472,000 during the prior week. The report showed that the number of people receiving unemployment insurance plunged to the lowest point since 2008, while those getting emergency benefits also fell after Congress failed to pass legislation extending the assistance. Elsewhere, a flurry of high profile retailers also reported stronger than expected same store sales for June. This helped allay concern that the US consumer was spending less due to the economic uncertainty.

Market Action- Confirmed Rally:

Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. Looking forward, the 200 DMA line should now act as near term support as this market continues advancing, while any reversal would be a worrisome sign. It is important to note that the NYSE composite, benchmark S&P 500 index, and the Dow Jones Industrial Average have now all seen their 50 DMA lines undercut their respective 200 DMA lines which is is known as a “death cross” and has bearish ramifications. In addition, remember to remain very selective because all of the major averages are still trading below their downward sloping 50 and 200 DMA lines.  It was somewhat disconcerting to see volume remain light (below average) behind the confirming gains. It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.

Ready For Change?

Inquire Today About Our Professional Money Management Services:
If your portfolio is greater than $250,000 and you would like a free portfolio review,
Click Here to learn more about our money management services.   * Serious inquires only, please.

Facebook
Twitter
LinkedIn

Here are more articles you may like

Claim Your Free Guide Today

Give us your email and we will give you the tools to change your life. 

FREE 7 DAY EMAIL COURSE

Learn about Early Entry Points & much more...

© ChartYourTrade | Contact us: website@chartyourtrade.com

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.

Charts and Data are courtesy of MarketSmith Incorporated. Join MarketSmith here.

Terms of Service