By Gareth Soloway on March 4th, 2010 11:43am Eastern Time
The markets initially rallied today on the back of great retail sales numbers and an announcement that Wal-Mart Stores, Inc. (NYSE:WMT) raised its dividend. Stocks like Abercrombie & Fitch Co. (NYSE:ANF), Family Dollar Stores, Inc. (NYSE:FDO) are soaring today as sales numbers, expected to be poor because of all the snow and weather problems, were actually amazingly good. Family Dollar Stores has jumped today almost 9.00% while Abercrombie & Fitch Co. has also rocketed up 10.50%.
In addition, Jobless Claims showed a solid reduction this week, dropping to 469,000, down 29,000 from last week. The markets had been worried as each of the last two weeks, jobless claims had risen close to the scary 500,000 number. This number today was definitely a relief to the markets.
With these two pieces of data helping give the market a bid, the dollar was also on the rise. This somewhat took the steam out of the markets. After gapping higher, the U.S. Dollar started to jump. Pending Home Sales also were announced at a disappointing drop of 7.60%. Considering this is closing in on the last chance to get the first time home buyer tax credit, numbers like this tell us the housing problems are far from over and another leg lower is likely.
After the gap higher, the 10:00am ET data, along with the rise in the dollar sent the markets lower. The SPDR S&P 500 ETF (NYSE:SPY) hit the double bottom from yesterday which signaled support. Sure enough, the markets bounced off of that level. The key to the chart on the intra day SPY is the head and shoulders pattern that has formed. Watch for a break of the neck line. Should this break, the SPY could sell all the way to a target of $111.00. Possibly as soon as tomorrow. If that neck line does not break, then the markets could hold up into early next week.
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Gareth Soloway
Chief Market Strategist
InTheMoneyStocks.com
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