Tuesday, May 17, 2011
Stock Market Commentary:
Stocks and a host of commodities fell after the latest round of tepid economic and earnings data was released. So far, the old adage, “Sell in May and Go Away,” appears to be working brilliantly. From our vantage point, the market rally remains under pressure due to the lackluster action in the major averages and several leading stocks.
Q1 Economic Results, Housing Starts, & Industrial Production:
Before Tuesday’s open a slew of high profile companies released mixed-to-lower Q1 results and the latest economic data missed estimates. The Commerce Department said housing starts (a.k.a. new homes being built), fell -11% from March and missed the Street’s estimate of 569,000. Work began at an annual pace of 523,000 houses last month. The report showed that building permits, a sign of future construction, also fell. This was the latest in a series of dissapointing data from the ailing housing market. A separate report showed that industrial production was unchanged in April which fell short of the Street’s estimate for a +0.4% increase.
Market Outlook- Rally Under Pressure
From our point of view, the market rally is under serious pressure which suggests caution is paramount at this juncture. Looking forward, the next level of support for the major averages are their respective 50 DMA lines and resistance is their 2011 highs. The rally remains in tact as long as support holds on a closing basis. If you are looking for specific help navigating this market, please contact us for more information.