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Markets Surge Into The 50 Day Moving Average

|Includes: AA, Chevron Corporation (CVX), INTC

The markets surged higher today after Alcoa Inc. (NYSE:AA) gave the markets something to cheer about in their earnings report.  Alcoa reported a profit of $0.13 per share when analysts had expected $0.12 per share in earnings.  Revenue also came in ahead of estimates.  For a market that has been worried about a major slow down and possible double dip recession, this was a positive.

While a definite positive for the markets, there are significant negatives that must be recognized.  First, the SPDR S&P 500 ETF (NYSE:SPY) just ran into the daily 50 moving average at $109.85.  This level is a major resistance level.  A pull back is expected off this level.  In addition, a majority of this rally is on extremely light volume on the week prior and the week of options expiration.  Lack of volume means lack of participation by institutional players.  Without big money behind the rally, it is unlikely to last very long.

Today, Intel Corporation (NASDAQ:INTC) reports earnings after the market closes. This will be a major report for the markets, especially the tech sector.  Intel is expected to report a profit of $0.43 per share.  The whisper number among Wall Street traders is for a profit of $0.45 per share. Watch the margin number as well as revenue and outlook.  Those will be most important as traders want to know what the future holds in regards to a possibly slowing economy again.

This rally we have seen over the last week and a half has come directly off the Master Turn Date.  This was released to our members in the Research Center and Intra Day Stock Chat.  It has been wide spread with commodities getting a major move higher.  Stocks like Chevron Corporation (NYSE:CVX) have truly been a leader jumping from a low last week of $67.00 to a high today of $73.45.  This stock is now short term extended and only a short distance from its daily 50 moving average.  To get more insight, swing trades, market guidance, analysis and education, join the Research Center.

Gareth Soloway
Chief Market Strategist