Wednesday, October 13, 2010
Stock Market Commentary:
Stocks rallied after the latest round of stronger than expected earnings and economic data hit the wires. Volume patterns remain healthy as the major averages continue marching higher. 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.
The rally began overnight when Japan reported machinery orders surged +10.1% compared to a -4.5% decline forecast. More stronger than expected economic data was released in the US when import prices fell in September, reflecting a drop in energy prices. The -0.3% decline in the import-price index topped the median forecast and followed a +0.6% gain in August. Earnings news also topped estimates with companies such as CSX Corp (CSX), Intel Inc. (INTL), and JPMorgan Chase (JPM) releasing their Q3 results. The fact that the market rallied on the news bodes well for this 7-week rally.
Market Action- Confirmed Rally:
So far, 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.
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 On Solid Earnings & Economic Data
Wednesday, October 13, 2010
Stock Market Commentary:
Stocks rallied after the latest round of stronger than expected earnings and economic data hit the wires. Volume patterns remain healthy as the major averages continue marching higher. 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.
The rally began overnight when Japan reported machinery orders surged +10.1% compared to a -4.5% decline forecast. More stronger than expected economic data was released in the US when import prices fell in September, reflecting a drop in energy prices. The -0.3% decline in the import-price index topped the median forecast and followed a +0.6% gain in August. Earnings news also topped estimates with companies such as CSX Corp (CSX), Intel Inc. (INTL), and JPMorgan Chase (JPM) releasing their Q3 results. The fact that the market rallied on the news bodes well for this 7-week rally.
Market Action- Confirmed Rally:
So far, 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.
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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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