Wednesday, October 27, 2010
Stock Market Commentary:
Stocks opened lower then rallied back into positive territory as the US dollar rallied, the S&P Case-Shiller index disappointed investors, and consumer confidence topped estimates. Volume patterns remain healthy as the major averages have now begun the 9th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, 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 Strong; Market Falls:
Stocks and commodities fell as the USD continued rallying after the latest round of solid economic data was released. Durable goods orders rose +3.3% last month which topped estimates. Meanwhile, the Commerce Department said sales of new houses jumped +6.6% last month to a 307,000 annual rate which also topped estimates. The stronger than expected economic data caused many to believe that the Fed may not completely enact QE 2 when they meet next Wednesday. So far, the market has been rising on the notion that the Fed will step up and buy another trillion dollars (or so) worth of “safe” investments (i.e. bonds). However, with the recent bout of “stronger than expected economic data, investors are concerned that the Fed will “only” buy $500 billion worth of bonds. Keep in mind that in 2009, the Fed bought $1.5 trillion worth of “safe” assets which helped propel other so-called “riskier” assets (i.e. stocks and commodities) higher.
Market Action- Confirmed Rally, Week 9:
Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The S&P 500 sliced below its two month upward trendline (shown above) which is not ideal. 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. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy. Trade accordingly.
SarhanConsulting 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 robust trading ideas across all asset classes. Since 2004 we have outperformed the S&P 500 on a regular basis. These results are based solely on our weekly research. All our prior reports (6 years) are available upon request.
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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 Mixed, Commodities Down; USD Up
Wednesday, October 27, 2010
Stock Market Commentary:
Stocks opened lower then rallied back into positive territory as the US dollar rallied, the S&P Case-Shiller index disappointed investors, and consumer confidence topped estimates. Volume patterns remain healthy as the major averages have now begun the 9th week of their ongoing rally. However, it is important to note that there have been an ominous number of distribution days that have emerged in the popular indexes in recent sessions which suggests caution. On average, 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 Strong; Market Falls:
Stocks and commodities fell as the USD continued rallying after the latest round of solid economic data was released. Durable goods orders rose +3.3% last month which topped estimates. Meanwhile, the Commerce Department said sales of new houses jumped +6.6% last month to a 307,000 annual rate which also topped estimates. The stronger than expected economic data caused many to believe that the Fed may not completely enact QE 2 when they meet next Wednesday. So far, the market has been rising on the notion that the Fed will step up and buy another trillion dollars (or so) worth of “safe” investments (i.e. bonds). However, with the recent bout of “stronger than expected economic data, investors are concerned that the Fed will “only” buy $500 billion worth of bonds. Keep in mind that in 2009, the Fed bought $1.5 trillion worth of “safe” assets which helped propel other so-called “riskier” assets (i.e. stocks and commodities) higher.
Market Action- Confirmed Rally, Week 9:
Heretofore, the action since this rally was confirmed on the September 1, 2010 follow-through day (FTD) has been strong but the market action has been wide-and-loose which is not a healthy sign. The S&P 500 sliced below its two month upward trendline (shown above) which is not ideal. 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. We have enjoyed large gains since the September 1st FTD and for the first time, the tape is getting sloppy. Trade accordingly.
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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 robust trading ideas across all asset classes. Since 2004 we have outperformed the S&P 500 on a regular basis. These results are based solely on our weekly research. All our prior reports (6 years) are available upon request.
How we can improve your performance:
Contact Us To Learn How We Can Help You!
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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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