IRIS Wealth Creation & Management

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Daily Market Summary & Analysis, SEPT 02, 2010

Today the Asian markets continued to rally after Wall Street’s best day for the September month since 1998. China up +1.30%, HongKong up +1.19%, Taiwan up +0.69%, Singapore up +0.13%, Japan up +1.52%, South Korea up +0.54%, Australia up +0.82% and India up +0.18%.

Spotlight came from South Korea as the International Monetary Fund (IMF) has raised the GDP forecast to 6.1% from 5.75%. Seoul’s finance ministry said on Thursday that the government’s stimulus packages and economic recovery are the main reasons for the upward GDP revision.

In the US front…
After the market opened, the bulls and the bears were still in battle as mixed macroeconomic data released. July factory orders was up only 0.1% versus 0.6% in June. However, the bull seemed to have an upper hand due to a surprising rise of  5.2% for July pending home sales. This is better than Wall Street’s bearish expectation. Weekly jobless claims data was also encouraging, new claims fell for the second week in a row, down -6,000 to 472,000. The four-week average fell -2,500 to 485,000, the U.S.  Department of Labor reported Thursday.

John Silvia, chief economist at Wells Fargo, commented in regard to today macroeconomic data that it would take time for economy to heal and there is no quick fix. “Q2 GDP was revised to 1.6% and 2% for the second half of this year,” he added. David Lutz, an analyst at Stifel Nicolaus Capital Market is bullish for commodity stocks, citing reasons such as increase demand from China and the U.S. second stimulus. Jeff Utz, US equity project manager at Credit Suisse also likes specific stocks such as industrial giant General Electric (GE), healthcare stocks, technology stocks such as Ciena (CIEN), and oil stock like Marathon Oil (MRO).

Major stock indexes traded in a tight range most of the day, but managed to close near session highs. The S&P 500 up +0.90% to 1,090.03, the DOW up +0.49% to 10,319.80, and the Nasdaq up +1.06% to 2,200.01. It’s impressive that the bulls can hold onto yesterday historic rally for the September month. On eyes are now focusing on the important U.S. non-farm payrolls on Friday. How the market react to this data will be the key for the next trading sessions. Resistance now are 1095, the psychological level at 1,100, and the 200d-MA at 1,115.62. Support levels are the 50d-MA at 1081.27, the 20d-MA at 1079.56, and 1050-1060 range.

Best regards to all, and good luck in your trading.
Disclosure: No positions in stocks mentioned

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