StockDesk Wednesday Update: Modest R...
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Richard Cox
StockDesk Wednesday Update: Modest Rallies Seen after Improved Consumer Confidence, Housing Prices

Stocks are attempting to stage a modest rally after positive surprises in consumer confidence surveys and in national housing prices.  Eight out of the 10 sector groups in the S&P 500 are showing gains, and the Dow Jones Industrials are trading back into record territory.  Positives on the day were seen as the Conference Board’s monthly consumer confidence report climbed to its highest level since 2008, home values (as measured by the S&P/Case-Shiller index) rose to their highest levels in seven years, and Moody’s raised its outlook for the U.S. banking sector.  Financial stocks saw some of the biggest gains, with State Street (STT) more than 4% higher after the Moody’s story hit the market wires.

More broadly, the housing data was probably the most encouraging item, showing that real estate values rose nearly 11% from the previous year.  The trend here is clearly in the bullish direction, as gains for the previous month also came in at a very solid 9.4%.  The Dow Jones is trading back above the 15,000 level and the S&P 500 is holding above 1660, defying the traditional “Sell in May, and go away” logic that is a common feature of the markets.  For the month, the S&P 500 has made gains of nearly 4%, which is the seventh straight month of gains (the longest monthly winning streak since Q3 2009).

Tesla, Tiffany Post Strong Gains  

In stock specific stories, Tiffany (TIF) showed gains of 4% on better than expected earnings results.  The company is the world’s second biggest in the luxury jewelry retail space, and earnings for the second quarter (excluding items) came in at 70 cents per share.  This result was much better than the 53 cents per share expected by analysts.  Tesla (TSLA) fared even better, rising by nearly 15% after news that the company is looking to expand the charger network used in its vehicles.  This announcement was expected to be implemented earlier but the company made the decision to wait until some large loans were repaid before improving this aspect of its automobiles.  The stock traded above the $100 level for the first time, and the company continues to be one of the biggest headline-grabbers of the year.

Chart Perspective

Tiffany Co. (TIF):


TIF is showing an ascending triangle, with prices now coming into significant long term resistance in the 81.80 region.  We will need to see an upside break here before getting long, but the bias is clearly to the topside given the series of higher lows that has been seen since 2009.  Prices have already tested this resistance level and pulled back on profit taking but as long as we hold above 78.10, the bias toward a bullish upside break remains intact.


Tesla (TSLA):

The meteoric rise in TSLA has been one of the most incredible stock moves of the last few months.  Momentum  is clearly  in the bullish direction but with indicator readings now firmly in overbought territory, we will need to see some corrective downside moves so that these readings can reset.  Look to buy dips into resistance turned support, which can now be found at 97.80.

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