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Written by Keith Lerner
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Monday, 23 March 2009 00:00 |
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Page 3 of 4
Figure 5. S&P 500 Challenging Near-Term Resistance
Source: SunTrust Robinson Humphrey, Thomson One
- Another tool we use to help decipher where the market may be in the current rally is the percentage of stocks in the S&P 500 are that above their 50-day moving average (see bottom panel of Figure 6). That number currently resides around 44%, which remains below the 80% level considered overbought and a point where previous rallies ran into trouble.
Figure 6. Percentage of Stocks Above 50-Day Moving Average Not Yet Overbought
Source: SunTrust Robinson Humphrey, Stockcharts.com
Upcoming Data
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Monday:
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Existing Home Sales
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Tuesday:
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OFEHO House Price Index
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Wednesday:
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Durable Goods, New Home Sales
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Thursday:
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Initial Jobless Claims, Revised Q4 GDP
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Friday:
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Income/Spending/PCE, Reuters/Michigan Consumer Sentiment
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Bottom Line
While still very early, there are tentative signs that the pace of the economic downturn may be moderating, but there is little doubt the environment remains weak. Yet as the old saying goes, you cannot go up until you stop going down, so simply being less bad is an incremental step in the right direction. It will also be important to closely watch the credit markets for signs that the Fed's aggressive action is working. All in all, we believe the current rally ultimately still has legs, but in the near term it may be choppy as the index digests some of recent gains and stocks flirt with historical resistance levels.
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