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MORNING
MARKET COMMENTARY - Friday, September 03, 2010
Mid-Cap Index Ends Above Short-Term And Long-Term Averages
Adam Sarhan, Contributing Writer, www.CANSLIM.net
Stocks ended higher on Thursday as investors digested a slew of economic data. Thursday's reported volume totals were lower on the NYSE and Nasdaq exchange compared to Wednesday's levels. Advancers led decliners by over a 2-to-1 ratio on the NYSE and by a 3-to-2 ratio on the Nasdaq exchange. New 52-week highs easily outnumbered new 52-week lows on the NYSE and on the Nasdaq exchange. There were 47 high-ranked companies from the CANSLIM.net Leaders List made a new 52-week high and appeared on the CANSLIM.net BreakOuts Page, one lower than the 48 issues that appeared on the prior session.
The European Central Bank (ECB) decided to hold interest rates steady, near record lows, when they met on Thursday. ECB president Jean Claude Trichet said the ECB is ready to extend emergency bank lending if needed. In the US, retail sales unexpectedly topped estimates thanks to holiday tax incentives, and pending sales of existing homes also beat estimates while rising +5.2% in July. Meanwhile, mortgage rates fell to +4.32% which is the lowest level in decades. The Labor Department said initial jobless claims fell by 6,000 to 472,000 last week which matched the Street's forecast. Investors are now waiting for August's official non-farm payrolls report to be released before Friday's open.
Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. It was encouraging to see a flurry of high-ranked leaders trigger fresh technical buy signals and break out of sound bases. The next important level to watch for the major averages are their respective 200-day moving average (DMA) lines. It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.
Q2 Webcast Rewind: The Q2 2010 CANSLIM.net Webcast aired at 8PM on Wednesday, June 30, 2010. A link to the webcast has been added near the top on the Premium Membership Homepage .The Q3 webcast has been scheduled for 8PM EST on Wednesday, September 29, 2010.
PICTURED: The S&P 400 Mid-Cap Index is the first major index to rally above its 50 and 200 DMA lines. It is in close striking distance of a multi-month downward trendline.
The Retail Index ($RLX +2.19%) was among Thursday's best group gainers and the Broker/Dealer Index ($XBD +0.76%) and Bank Index ($BKX +1.17%) also posted influential gains. The tech sector had a positive bias as the Internet Index ($IIX +1.44%), Networking Index ($NWX +1.46%), Biotechnology Index ($BTK +1.69%), and Semiconductor Index ($SOX +2.07%) posted unanimous gains. Commodity-linked groups were also on the rise as the Gold & Silver Index ($XAU +1.17%), Integrated Oil Index ($XOI +1.32%), and Oil Services Index ($OSX +0.86%) chugged higher. The Healthcare Index ($HMO +0.44%) was a relative laggard, yet it also posted a modest gain on the widely positive session.
Charts courtesy www.stockcharts.com
PICTURED: The Internet Index's ($IIX +1.44%) 50-day moving average (DMA) line stayed above its 200 DMA line, and today's close was its best since April.
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