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Stock-Markets / Stock Markets 2011 Feb 04, 2011 - 11:06 AM GMT

By: Chris_Ciovacco

Stock-Markets

Best Financial Markets Analysis ArticleWhile it would have seemed implausible during the depths of the 2008 financial crisis, the financial markets and economy are getting a boost from commercial real estate. According to Bloomberg:


Prices of commercial properties sold by institutional investors surged 19 percent in 2010, the second-biggest gain on record, according to an index developed by the MIT Center for Real Estate. Investments in office properties, the largest part of the market, more than doubled last year to $41.6 billion, according to Real Capital Analytics Inc., which tracks commercial property sales globally.

We made the case yesterday for a positive outlook for stocks and risk assets based on positive fundamentals and positive technicals. Today’s employment report will give us something new to chew on from a fundamental perspective.

Our technical argument from February 3 referenced two market breadth indicators to monitor. It is good news that these have improved this week as of Thurday’s close. However as detailed on February 3, “overbought” conditions in these measures of market breadth would give us pause. The charts below show the progress of these indicators on a weekly basis. On a daily chart, we had a mixed bag on Thursday; NYHL was down and NYSI was up.

In the post-employment report market, here are a few things we are monitoring in order to better understand the staying power of the current leg up in stock prices. The S&P 500 has very significant long-term support near 1,200, which means even a big correction would most likely not derail the bull market. See December 15 comments for more detail on the meaning of the chart below.

Shorter-term, stocks have the next basic form of possible resistance coming in near 1,313. Notice 1,313 acted as support in early 2008 (see green) and then as resistance in late 2008 (see red); this makes 1,313 more important to traders in 2011. Hypothetically, it is plausible the markets become concerned about the end of QE2, and/or rising interest rates in the coming days and weeks; this could bring 1,313 or 1,326 into play from a possible resistance standpoint.

The reaction over the next few trading sessions to Friday’s monthly labor report will help clear up some questions related to the U.S. dollar. The dollar remains weak, but there are two forms of possible support shown on the weekly and monthly charts below. We believe the fundamentals will determine the dollar’s fate, with the technicals playing second fiddle.

By Chris Ciovacco
Ciovacco Capital Management

    Copyright (C) 2011 Ciovacco Capital Management, LLC All Rights Reserved.

    Chris Ciovacco is the Chief Investment Officer for Ciovacco Capital Management, LLC. More on the web at www.ciovaccocapital.com

    Ciovacco Capital Management, LLC is an independent money management firm based in Atlanta, Georgia. As a registered investment advisor, CCM helps individual investors, large & small; achieve improved investment results via independent research and globally diversified investment portfolios. Since we are a fee-based firm, our only objective is to help you protect and grow your assets. Our long-term, theme-oriented, buy-and-hold approach allows for portfolio rebalancing from time to time to adjust to new opportunities or changing market conditions. When looking at money managers in Atlanta, take a hard look at CCM.

    All material presented herein is believed to be reliable but we cannot attest to its accuracy. Investment recommendations may change and readers are urged to check with their investment counselors and tax advisors before making any investment decisions. Opinions expressed in these reports may change without prior notice. This memorandum is based on information available to the public. No representation is made that it is accurate or complete. This memorandum is not an offer to buy or sell or a solicitation of an offer to buy or sell the securities mentioned. The investments discussed or recommended in this report may be unsuitable for investors depending on their specific investment objectives and financial position. Past performance is not necessarily a guide to future performance. The price or value of the investments to which this report relates, either directly or indirectly, may fall or rise against the interest of investors. All prices and yields contained in this report are subject to change without notice. This information is based on hypothetical assumptions and is intended for illustrative purposes only. THERE ARE NO WARRANTIES, EXPRESSED OR IMPLIED, AS TO ACCURACY, COMPLETENESS, OR RESULTS OBTAINED FROM ANY INFORMATION CONTAINED IN THIS ARTICLE. PAST PERFORMANCE DOES NOT GUARANTEE FUTURE RESULTS.

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