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MARKET COMMENTARY - Wednesday, June 19, 2013
The major averages rose to close near their best levels of the session on Tuesday. The volume totals were reported near or lower than the prior session totals on the NYSE and on the Nasdaq exchange, a hint that institutional investors were not increasing their buying efforts while the market rose. Breadth was positive as advancers led decliners by more than 2-1 on both the NYSE and Nasdaq exchange. There were 72 high-ranked companies from the CANSLIM.net Leaders List making new 52-week highs and appearing on the CANSLIM.net BreakOuts Page, up from the prior session total of 53 stocks. Stocks hitting new 52-week highs outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were gains for only 5 of the 11 high-ranked companies currently included on the Featured Stocks Page, a disconcertingly weak showing from leading stocks versus the broader market's bullish bias on the day.
The major average advanced for a second consecutive day as investors await the results of the Fedís two-day policy for indications whether the central bank may start tapering its $85 billion a month bond-buying program. The market was also higher after this morning's economic releases. Before the open, a report showed prices paid by consumers edged +0.1% higher in May, slightly below projections for a +0.2% increase. Food prices declined for the first time in four years. Excluding food and energy, the consumer price index rose +0.2%, in line with consensus estimates. Separate releases showed housing starts were up +6.8% to 914,000 from a revised 856,000 in April while building permits fell -3.1% to 974,000 last month.
All 10 sectors in the S&P 500 advanced on the session. General Electric Co (GE +2.36%) and FedEx Corp (FDX +1.09%) rose as Industrials were the best performing group. Tech shares including Garmin Ltd (GRMN +2.35%) and financial companies including American Express Co (AXP +1.54%) also advanced on the session. Telecom and consumer discretionary stocks outperformed as AT&T Inc (T +1.15%) and Best Buy Co Inc (BBY +2.37%).Consumer staples were the worst performing sector with Hormel Foods Corp (HRL -3.59%) down after the meat producer lowered its full-year earnings forecast.
Treasuries were little changed with the 10-year note flat to yield 2.18%.
A follow-through day of meaningful gains from at least one of the major averages on higher volume is an important reassurance to watch for in the near-term before investors might seriously consider new buying efforts. Last week the market (M criteria) weakness was labeled a "correction" as this commentary reminded members - "Be protective of any gains, and limit losses! Be especially watchful for any individual issues flashing technical sell signals. It is vitally important to your success with the fact-based investment system to reduce exposure and preserve cash during market downdrafts."
As always, watch upcoming CANSLIM.net reports for new action-worthy leaders best matching the winning models to be covered as they emerge and then included on the Featured Stocks Page - with our Certified experts' latest notes and links to additional resources including detailed analysis with annotated graphs. The Premium Member Homepage - includes "dynamic archives" to all prior pay reports published. Watch for an announcement via email concerning the next WEBCAST.
PICTURED: The S&P 500 Index found support near its 50-day moving average (DMA) line and a multi-month upward trendline defining important near-term support. The window is now open for a follow-through day (FTD) of gains from the major averages within the most ideal period 4-7 days after the major averages halted their latest slide.
Medical related shares had a positive bias as the Healthcare Index ($HMO +2.08%) and the Biotechnology Index ($BTK +1.20%) posted gains. The Semiconductor Index ($SOX +1.63%) led the tech sector higher while the Internet Index ($IIX +0.87%) and the Networking Index ($NWX +0.58%) posted smaller gains. The Retail Index ($RLX +1.05%) and gains in financial shares added a positive influence on the major averages as the Bank Index ($BKX +0.81%) and the Broker/Dealer Index ($XBD +0.96%) both ratcheted higher. Gains in energy-related shares also boosted the Oil Services Index ($OSX +0.72%) and the Integrated Oil Index ($XOI +0.27%). Meanwhile, the Gold & Silver Index ($XAU -2.61%) was a clear laggard as the classic "safe haven" group slumped for a big loss on the mostly positive session.
Charts courtesy www.stockcharts.com
PICTURED: The Healthcare Index ($HMO +2.08%) was a standout gainer as it rallied near its May high.