Bernanke Fails To Inspire Markets

Thursday, September 8, 2011
Stock Market Commentary:

Stocks were relatively quiet on Thursday as investors waited for Obama’s speech to address the ailing jobs market. At this point, the current rally is under pressure evidenced by several distribution days (heavy volume declines) since the latest FTD. It is important to note that even with the latest FTD, the major averages are still trading below several key technical levels which means this rally may fade if the bears show up and quell the bulls’ efforts.

ECB Says Threats Against Euro Are Worse and Jobless Claims Rise:

Before Thursday’s open, the Bank of England (BOE) and European Central Bank (ECB) held rates steady but said downward pressure remains a concern. ECB President Trichet said threats to the Euro have worsened which put mild pressure on equity futures and the euro. In the U.S., the Labor Department said initial jobless claims rose 2k to 414,000 which topped the Street’s estimate for 400,000. Separately, the trade deficit for July totaled $44.8 billion, which was less than the Street’s estimate for $51.5 billion. Fed Chairman Ben Bernanke spoke on Thursday and largely reiterated his recent stance regarding the economy. At 7 pm EST, President Obama is slated to address the nation with a new plan to help the ailing jobs market. In other news, Google (GOOG) acquired Zagat today which is just another notch on their belt.

Market Outlook- Rally Under Pressure:

The major averages confirmed their latest rally attempt on Tuesday, August 23, 2011 which was the 11th day of their latest rally attempt. It is important to note that all major rallies in history began with a FTD however not every FTD leads to a new rally (i.e. several FTDs fail). In addition, it is important to note that the major averages still are under pressure as they are all trading below their longer and shorter term moving averages (50 and 200 DMA lines) and are all still negative year-to-date. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. This rally will fail if/when several distribution days emerge or August’s lows are breached. Until then, the bulls deserve the benefit of the doubt. If you are looking for specific help navigating this market, please contact us for more information.