December 29, 2011

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DAILY COMMENTARY

SandP 500 Negative Year-to-Date (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 December 28, 2011 (5:12 p.m. ET, Dec. 28): Closing Prices: DOW 12,151.41 (-139.94, -1.14%), SandP 500 1,249.64 (-15.79, -1.25%), NASDAQ 2,589.98 (-35.22, -1.34%), Nikkei 225 8,423.62 (-, -%), DAX 5,771.27 (-118.49, -2.01%), FTSE 5,507.40 (-5.30, -0.1%) OIL 99.50, GOLD 1,557.50, SILVER 27.07 EURO 1.2941, YEN 77.96, BRITISH POUND 1.5458, U.S. DOLLAR INDEX 80.925 Markets Fall on Momentum Reversal Volume remained light in Wednesday’s session, but the technical setups are holding quite well as anticipated. The Momentum Reversal Short setup we saw developing into yesterday’s open triggered immediately and the light volume did exactly what light volume tends to do to trend moves: it amplified it. This led to rapid downside follow through on the short right out of the gate and throughout the morning.

Wednesday’s drop was a harsh reality check on just how fragile the gains made since last week’s lows are. The selloff wiped out the SandP 500’s ($SPX) gains year-to-date, leaving it lower by 0.6% into the close. Meanwhile, the Nasdaq Composite ($COMPX) is down 2.4%. The Dow Jones Ind. Average ($DJI) is still positive, but it will also continue to struggle with only two trading days left this year.

Wednesday’s Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a loss of 139.94 points, or 1.14%, and closed at 12,151.41. All of the Dow’s thirty index components ended the session in the red. The weakest were Wal-Mart (WMT) (-3.64%), Alcoa (AA) (-3.07%), Caterpillar (CAT) (-2.38%), and Cisco Systems (CSCO) (-2.26%). The SandP 500 ($SPX) finished the session with a loss of 15.79 points, or 1.25%, and closed at 1,249.64. Only twenty-three of the index’s 500 components managed a gain. The strongest individual percentage performers in the index were Xylem (XYL) (+2.04%) and Macys (M) (+1.21%). The weakest were Cliffs Natural Resources (-4.62%), Tesoro Corp. (TSO) (-4.23%), and Nabors Industries (NBR) (-4.13%). The Nasdaq Composite ($COMPX) ended the session lower by 35.22 points, or 1.34%, on Wednesday and it closed at 2,589.98. Only five components in the Nasdaq-100 ($NDX) posted a gain. The strongest performers were Whole Foods Market (WFM) (+0.81%) and Bed Bath and Beyond (BBBY) (+0.42%). The weakest were Fossil Inc. (FOSL) (-4.58%), Flextronics Intl. (FLEX) (-4.55%), and Research In Motion (RIMM) (-4.17%).

Market Outlook Still to come on the data front this week are the National Realtors’ pending-home-sales report today and the Chicago Purchasing Managers Index report for December on Friday. The market is forming a two-wave continuation short pattern on the 15 minute time frame on the all sessions charts heading into Thursday’s open with the second wave of correction on the upside underway into the bell. The extent of Wednesday’s selloff, however, can make this short pattern more hesitant. Typically the market will rise into the end of the year, so the weakness we saw in yesterday’s trade and the short pattern currently forming risk leaving a lasting impact on market sentiment as we head into the new year.

ECONOMIC REPORTS AND EVENTS THIS WEEK

Dec 27 9:00 AM Case-Shiller 20-city Index Oct Dec 27 10:00 AM Consumer Confidence Dec Dec 28 7:00 AM MBA Mortgage Index 12/24 Dec 29 8:30 AM Initial Claims 12/24 Dec 29 8:30 AM Continuing Claims 12/17 Dec 29 10:00 AM Pending Home Sales Nov Dec 29 11:00 AM Crude Inventories 12/24 Dec 30 9:45 AM Chicago PMI Dec International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Dec 26 21:00 CNY Industrial Profits YTD (NOV) Dec 27 JPY Annualized Housing Starts (NOV) Dec 27 JPY Housing Starts (NOV) Dec 27 02:00 CHF UBS Consumption Indicator (NOV) Dec 27 10:00 USD Consumer Confidence (DEC)*** Dec 27 18:30 JPY Household Spending (NOV) Dec 27 18:30 JPY Jobless Rate (NOV) Dec 27 18:30 JPY National Consumer Price Index (NOV) Dec 27 18:30 JPY National Consumer Price Index Ex-Fresh Food (NOV) Dec 27 18:30 JPY National Consumer Price Index Ex Food, Energy (NOV) Dec 27 18:50 JPY Retail Trade (NOV) Dec 27 18:50 JPY Large Retailers’ Sales (NOV) Dec 27 18:50 JPY Industrial Production (NOV P) Dec 28 05:30 CHF KOF Swiss Leading Indicator (DEC) Dec 29 GBP Nationwide House Prices n.s.a. (DEC) Dec 29 10:00 USD Pending Home Sales (NOV) Dec 29 18:15 JPY Nomura/JMMA Manufacturing Purchasing Manager Index (DEC) Dec 29 19:30 AUD Private Sector Credit (NOV) Dec 30 EUR German Consumer Price Index (DEC)*** Dec 30 EUR German Consumer Price Index – EU Harmonised (DEC P)*** Dec 30 04:30 GBP Bank of England Housing Equity Withdrawal (3Q) (3Q) *** 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, Dec 26, 2011 Before: – During: – After: – Tuesday, Dec 27, 2011 Before: CALM During: – After: Wednesday, Dec 28, 2011 Before: – During: PNY After: BLIN Thursday, Dec 29, 2011 Before: – During: – After: DMND Friday, Dec 30, 2011 Before: SHIP, MVC, RDI During: EONC, GSI, HAUP After: ARKR, NOBH 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. (c) 1998-2011 All information presented is property of TradingFromMainStreet.com and Bastiat Group, Inc. PO Box 330 Roland, IA 50236 , USA To unsubscribe or change subscriber options visit: http://www.aweber.com/z/r/?LEwsrOzMtCxMnBwcTCzstEa0jIwMjAyMzJw=