Week In Review: Stocks Edge Higher


Friday, March 19, 2010
Market Commentary:

The major averages ended higher this week and hit fresh multi month highs.  As expected, volume totals were reported higher on the Nasdaq exchange and on the NYSE compared to the prior session due to Friday’s quadruple witching session. Decliners led advancers by nearly a 3-to-1 ratio on the NYSE and by nearly a 2-to-1 ratio on the Nasdaq exchange. There were 37 high-ranked companies from the CANSLIM.net Leaders List that made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, lower than the 46 issues that appeared on the prior session. New 52-week highs again overwhelmingly trumped new lows on both exchanges.

Monday & Tuesday: Stocks Advance As Fed Holds Rates Steady

On Monday, stocks ended mixed as rumor spread that the Chinese or Indian Central Bank would raise rates in the near future. On Tuesday, the US Fed decided to hold rates steady near record lows and reiterated their stance to keep rates low as the economy continues to recover. Elsewhere, February housing starts were reported slightly better than expected, even though starts declined –5.9% from January.  Prices of goods imported into the U.S. in February fell more than forecast.  Health care stocks overcame modest pressure after House Speaker Nancy Pelosi said there will be enough votes in the House to pass health care reform.  Meanwhile, European markets advanced as European leaders worked out a plan for emergency aid to Greece if needed.  

Wednesday- Stocks Rally As Inflation Remains Low:

On Wednesday, stocks rose, sending the Dow Jones Industrial Average and the benchmark S&P 500 Index to fresh 18 month highs and boosting the Nasdaq Composite Index to a fresh 19 month high after the latest round of healthy economic data was released. Producer prices slid by a larger than expected -0.6% which eased inflation woes and eased pressure on the Federal Reserve to raise rates in the foreseeable future. Overseas, the Bank of Japan doubled its lending program aimed at increasing its credit growth to $222 billion. In Europe, investor confidence rose after the latest round of stronger than expected earnings were released.

Thursday & Friday: Stocks Pullback To Consolidate Recent Move

Stocks ended mixed on Thursday after the latest round of mixed economic data was released: consumer prices were mild, leading economic indicators rose +0.1% last month while jobless claims slid. On Friday, stocks fell after Monday’s fears were confirmed when the Indian Central Bank raised rates to curtail their robust economy and curb inflation.

Market Action- Confirmed Rally:

The fact that we have not seen any serious distribution days since the FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

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