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Market Commentary: The Uptrend Continues, but Expect a Pause
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Written February 7, 2012 by Victoria Bogner
So far this year, Europe has managed to fade into the background. The problems are still there but investors are becoming more and more comfortable with them. There’s another place to focus, and that’s here in the United States. Earnings have been coming out better than expected for the most part and the unemployment rate has taken another tumble to 8.3%. While some of the jobless claims numbers were readjustments from previous months and therefore not as robust as the media would claim, the perception of the numbers were enough to cause the market to rally last week. This brings most indices to the same place of struggle that they experienced in 2011.
Above is a weekly chart of the S&P 500; in other words, each bar represents one week. The blue line represents market resistance. You can see back in late April and July of 2011, the market bumped up against that blue line but didn’t manage to sustainably cross above it. This week, we’re at that same level again. This is very substantial resistance, and it’s normal for the market to have a pause or a pullback of a few percentage points at this price level.
The test will be if the market can push above this resistance line. If it can, we could see this rally continue unabated for a few more weeks. As far as market health on other fronts, indicators of market breadth and stability continue to show strength. In addition, stocks have been shrugging off bad news and generally trending up throughout the trading day for the past week, especially on down days. This is another positive sign. We remain fully invested in our models and are carefully monitoring the market to see if it can finally break above to new three-year highs.
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Victoria Bogner, CFP®
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McDaniel Knutson Financial Partners
2500 West 31st Street, Ste B Lawrence, KS 66047
Phone 785.841.4664 Fax 785.841.7719
www.mcdanielfinancial.com/
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The views are those of Victoria Bogner and should not be construed as investment advice. All information is believed to be from reliable sources, however, we make no representation as to its completeness or accuracy. All economic and performance information is historical and not indicative of future results.
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