January 25, 2011

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DAILY COMMENTARY

Dow Pushes For Last Year’s Highs (Note: Unless otherwise stated, the index action described below relates to the EMini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.)

WEDNESDAY’S MARKET WRAP-UP

Market Snapshot for January 25, 2011 (10:10 p.m. ET): Closing Prices: DOW 12,756.96 (+81.21, +0.64%), SandP 500 1,326.06 (+11.41, +0.87%), NASDAQ 2,818.31 (+31.67, +1.14%), Nikkei 225 8,847.35 (-36.34, -0.41%), DAX 6,421.85 (+2.63, +0.04%), FTSE 5,723.00 (-28.90, -0.5%) OIL 99.82, GOLD 1,710.80, SILVER 33.105 EURO 1.3108, YEN 77.76, BRITISH POUND 1.5656, U.S. DOLLAR INDEX 79.59 12,876 12,876.

That was last year’s high in the Dow Jones Industrial Average ($DJI). The market has had any “big” days over the past month, but this hasn’t kept it from continuing to push higher. The 200 period moving average on the 15 minute time frame and 10 day moving average on the daily have been serving as strong support. The only real attempt to come close to breaking that level was on the 13th, but the attempt lacked a confirmation move. Over the past week the market has been trying to gain momentum once again and break free of the daily support to make a run for those previous highs from last year, but so far it has struggled to do so. Intraday strength has often been erased by weakness overseas that has pulled the index futures lower in early-morning trade. Today, however, the futures have been moving higher following only a brief selloff soon after the European open.

Wednesday’s strength came on the heels of the latest Fed announcement, which included a statement for the first time ever on its stance for upcoming rate changes. The Fed stated that it expects to leave rates “as is” until late 2014. This reflects a slower view of economic growth than in the past. Additionally, it changed its inflation target to 2%, which is now in line with other major central banks. There isn’t much on the data front that will really discourage this latest attempt at a retest of highs either. New home sales for the past month are due out at 10:00 a.m. ET and are really the only thing on the docket that will offer the potential to sway sentiment. Although housing hasn’t had much of an impact on intraday trade in quite some time, it has been showing some improvement recently. This could give the data more weight than it has over the past year since market will be watching for confirmation of further stability arising.

INDEX WRAP-UP

The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a gain of 81.21 points, or 0.64%, and closed at 12,756.96. Twenty-four of the Dow’s thirty index components posted a gain. The strongest performers were Caterpillar (CAT) (+2.60%), DuPont (DD) (+2.39%), and Alcoa (AA) (+2.04%). The top percentage losers were Hewlett Packard (HPQ) (-0.7%) and Verizon (VZ) (-0.26%). The SandP 500 ($SPX) finished the session with a gain of 11.41 points, or 0.87%, and closed at 1,326.06. All ten of the index’s industry groups posted a gain. The top performing ones were materials (+1.6%), utilities (+1.6%), and industrials (+1.2%). The top individual percentage performers were Textron Inc. (TXT) (+14.58%), CA Inc. (CA) (+9.68%), and Apple (AAPL) (+6.24%). The top decliners were Corning (GLW) (-10.74%), Xerox (XRX) (-9.92%), and Motorola Solutions (MSI) (-6.10%). The Nasdaq Composite ($COMPX) ended the session higher by 31.67 points, or 1.14%, on Wednesday and it closed at 2,818.31. The strongest performers in the Nasdaq-100 ($NDX) were CA Inc. (CA) (+9.68%), Research In Motion (RIMM) (+8.59%), and Apple (AAPL) (+6.24%). The weakest were Activision Blizzard (ATVI) (-2.69%), Sears Holdings (SHLD) (-1.99%), and Google (GOOG) (-1.97%).

ECONOMIC REPORTS AND EVENTS THIS WEEK

U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Jan 25 7:00 AM MBA Mortgage Index 01/21 Jan 25 10:00 AM Pending Home Sales Dec- Jan 25 10:00 AM FHFA Housing Price Index Nov Jan 25 10:30 AM Crude Inventories 01/21 Jan 25 12:30 PM FOMC Rate Decision Jan Jan 26 8:30 AM Initial Claims 01/21 Jan 26 8:30 AM Continuing Claims 01/14 Jan 26 8:30 AM Durable Orders Dec Jan 26 8:30 AM Durable Orders -ex Auto Dec Jan 26 10:00 AM New Home Sales Dec Jan 26 10:00 AM Leading Indicators Dec Jan 27 8:30 AM Chain Deflator-Adv. Q4 Jan 27 8:30 AM GDP-Adv. Q4 Jan 27 9:55 AM Michigan Sentiment – Final Jan International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Jan 24 JPY Bank of Japan Rate Decision (JAN 24)*** Jan 24 03:30 EUR German Purchasing Manager Index Manufacturing (Jan A) Jan 24 03:30 EUR German Purchasing Manager Index Services (Jan A) Jan 24 04:00 EUR Euro-Zone Purchasing Manager Index Composite (Jan A) Jan 24 04:00 EUR Euro-Zone Purchasing Manager Index Manufacturing (Jan A) Jan 24 04:00 EUR Euro-Zone Purchasing Manager Index Services (Jan A) Jan 24 04:30 GBP Public Finances (PSNCR) (Dec) Jan 24 04:30 GBP PSNB ex Interventions (Dec) Jan 24 04:30 GBP Public Sector Net Borrowing (Dec) Jan 24 05:00 EUR Euro-Zone Industrial New Orders (NOV) (Nov) Jan 24 08:30 CAD Retail Sales (NOV) (Nov) Jan 24 18:50 JPY Merchandise Trade Balance Total (Dec) Jan 24 19:30 AUD Consumer Prices Index (4Q)*** Jan 24 19:30 AUD Consumer Prices Index RBA Trimmed Mean (4Q) Jan 24 19:30 AUD Consumer Prices Index RBA Weighted Median (4Q) Jan 24 21:00 NZD Credit Card Spending (Dec) Jan 25 04:00 EUR German IFO – Business Climate (Jan) Jan 25 04:00 EUR German IFO – Current Assessment (Jan) Jan 25 04:00 EUR German IFO – Expectations (Jan) Jan 25 04:30 GBP Bank of England Minutes*** Jan 25 04:30 GBP BBA Loans for House Purchase (Dec) Jan 25 04:30 GBP Gross Domestic Product (4Q A)*** Jan 25 10:00 USD Pending Home Sales (Dec) Jan 25 12:30 USD Federal Open Market Committee Rate Decision (JAN 25)*** Jan 25 15:00 NZD Reserve Bank of New Zealand Rate Decision (JAN 26)*** Jan 25 16:30 NZD Business NZ Performance of Manufacturing Index (Dec) Jan 26 02:00 EUR German GfK Consumer Confidence Survey (FEB) (Feb) Jan 26 08:30 USD Durable Goods Orders (Dec)*** Jan 26 08:30 USD Durables Ex Transportation (Dec) Jan 26 10:00 USD Leading Indicators (Dec) Jan 26 10:00 USD New Home Sales (Dec) Jan 26 16:45 NZD Trade Balance (Dec) Jan 26 16:45 NZD Balance (YTD) (Dec) Jan 26 18:30 JPY National Consumer Price Index (Dec) Jan 26 18:30 JPY National Consumer Price Index Ex Food, Energy (Dec) Jan 26 18:50 JPY BOJ to Publish Minutes of December 20-21 Board Meeting*** Jan 26 18:50 JPY Retail Trade (Dec) Jan 26 18:50 JPY Large Retailers’ Sales (Dec) Jan 27 GBP Nationwide House Prices n.s.a. (Jan) Jan 27 03:00 CHF KOF Swiss Leading Indicator (Jan) Jan 27 08:30 USD Gross Domestic Product (Annualized) (4Q A)*** Jan 27 08:30 USD Gross Domestic Product Price Index (4Q A)*** Jan 27 08:30 USD Core Personal Consumption Expenditure (4Q A) Jan 27 08:30 USD Personal Consumption (4Q A) Jan 27 09:55 USD U. of Michigan Confidence (Jan F)*** *** Highly influential Notice: The Bastiat Group, Inc. has attempted to verify the information contained in this calendar, however, any aspect of such info may change without notice. Foreign economic reports included in this list are only those deemed “medium to high impact”.

KEY EARNINGS ANNOUNCEMENTS THIS WEEK

Monday, Jan 23, 2012 Before: BOH, HAL, LCRY, PETS, STBA, BSRR, TWIN, UBNK, WIBC During: – After: ALB, TBBK, CATY, CSX, ELS, FNB, FDEF, HMNF, JJSF, KSU, NBTB, PKG, PRK, PLXT, PLCM, PBNY, STM, TXN, TRST, TUES, VMW, VLTR, WDC, WWD, ZION Tuesday, Jan 24, 2012 Before: APD, AKS, ASH, BHI, EAT, CNI, COH, CBE, DD, EMC, FMER, GSBC, HOG, IIVI, IGT, JNJ, KEY, KMB, MCD, MDP, MTG, MNRO, OSIS, BTU, PRWT, PVTB, DGX, RYN, RF, SMED, SI, SNV, TCB, TRV, VZ, VCBI, WAT During: PTI, SEV, SFST, WFD After: AMD, ALTR, AAPL, BKI, CA, EFII, ETH, FBC, FIO, HTCH, IBKC, MRTN, MRCY, NSC, OMN, PCBK, PVSW, RFMD, STLD, SYK, SMCI, SUPX, TAYC, TPX, TSS, TRMK, UMBF, WSBC, WSTL, YHOO Wednesday, Jan 25, 2012 Before: ABT, ATI, AIT, ADP, BKU, BMS, BA, BOLT, CPF, COP, GLW, CRRC, CFR, DAL, DOV, EXC, FCFS, FCF, FMBI, GD, HES, HCBK, IGTE, MPX, MWV, MOLX, MSI, NYB, NVS, OXY, PJC, PII, BPOP, PX, REDF, RKT, ROK, ROL, RES, SAP, SLAB, SO, STJ, SWFT, TEL, ERIC, TXT, UGI, UTX, LCC, GWW, WLP, WRLD, XRX During: AVX, UVSP After: AOSL, APU, AMGN, ANEN, AF, BANR, BRKL, ELY, CGI, CTXS, COHR, CNS, CVD, CCI, CTS, DRE, ETFC, EGBN, ESSA, FISI, FCBC, HXL, HRC, IPHI, ISSI, KNX, LRCX, LOGI, LSI, MLNX, MBVT, MIPS, MUR, NFLX, NE, NFBK, OI, PMTC, QTM, RJF, RLI, ROCM, SNDK, SWK, STSA, SUSQ, SYMC, SYMM, TER, TCBI, URI, VAR, WASH, ZHNE Thursday, Jan 26, 2012 Before: FLWS, MMM, ARG, ALK, ABC, AME, ART, T, AN, AVT, BLL, BAX, BGG, BMY, BC, CCMP, CP, CRR, CRS, CSH, CAT, CELG, CL, CLP, COLB, CNX, COV, CY, DLX, ETN, EGN, EFSC, EQT, FNFG, HSC, ISCA, IVZ, ESI, JEC, JNS, JBLU, KMT, LMT, LYTS, MKC, MJN, MEG, MWW, NPBC, NMM, NEI, NOK, NUE, NUTR, ORI, ORRF, POT, PCP, PSSI, QSII, RDCM, RTN, RGS, SASR, SHW, STEL, TDY, LG, TWC, UTEK, UMPQ, UA, UBSI, UCBI, VLY, WCC, ZMH During: FRME, MUSA After: ABAX, ARBA, BNCL, BPFH, BVSN, CLS, CPHD, CB, CRUS, CRBC, COBZ, CPSI, CPWR, DWCH, DLA, DV, DLLR, DCOM, EMN, ESIO, ELX, FII, FFIN, FSL, GBCI, GDOT, GSIT, HBHC, HEOP, HUBG, INFA, ISBC, JBHT, JNPR, KTEC, KLAC, LSCC, MATW, MXIM, MBFI, MBTF, MCRL, MCRS, MMI, NBBC, NST, PFBC, QLGC, RMD, RVBD, RHI, RRR, RYL, SCSC, SBCF, CODE, SBUX, STRT, SXL, SIVB, SYNA, TNAV, WRLS, TSRA, TKR, VRSN, VPRT, WBCO, WERN, WAIR, WMS, WSFS Friday, Jan 27, 2012 Before: AOS, AHGP, ARLP, MO, ACO, ABFS, CVX, CMCO, DHI, D, EBTX, GHM, HON, IDXX, IMGN, LM, LPL, NWL, NEE, NS, NSH, PG, PFS, SCBT, TROW, USAP, WTBA, WCBO

During: – After: SCCO Note: All economic numbers and earnings reports are in line with those compiled by Briefing.com. Occasionally changes will occur that are made after the posting of this column and some companies have not confirmed their time, so always double check when taking positions overnight during earnings season! (?) = Not yet confirmed at the time the list was compiled.

DISCLAIMER

There is a very high degree of risk involved in trading securities. Past results are not indicative of future returns. Prior to the execution of any securities trade, you should always consult with your broker or other financial advisor. The positions given and described by the Bastiat Group, Inc. and its employees and affiliates are for educational purposes only. The Bastiat Group, Inc. and its members, employees, agents, consultants, analysts, representatives, content and/or service providers, affiliates, subsidiaries, successors and assigns (hereinafter collectively, “The Bastiat Indemnities”) assume no responsibility or liability for your trading and investment results. Go to http://www.tonihansen.com/disclaimer.html for a complete disclaimer.

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