December 21, 2011
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DAILY COMMENTARY
Market Recovery Challenged (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.) TUESDAY’S MARKET WRAP-UP Market Snapshot for December 20, 2011 (12:03 a.m. ET, Dec. 21): Closing Prices: DOW 12,103.58 (+337.32, +2.87%), SandP 500 1,241.30 (+35.95, +2.98%), NASDAQ 2,603.73 (+80.59, +3.19%), Nikkei 225 8,452.26 (+115.78, +1.39%), DAX 5,847.03 (+176.32, +3.11%), FTSE 5,419.60 (+54.61, +1.02%) OIL 97.92, GOLD 1,625.40, SILVER 29.64 EURO 1.3104, YEN 77.79, BRITISH POUND 1.5665, U.S. DOLLAR INDEX 80.06
Tuesday Rally Boosted by Housing The market was on a tear on Tuesday as a broad market rally which began afterhours on Monday evening gained strength with Europe and soared into Tuesday’s open. Positive housing data helped fuel the recovery. November’s housing starts were up 9.3% to a seasonally adjusted annual rate of 685,000. Meanwhile, building permits were up 5.7% to a seasonally adjusted 681,000 units. Most of the gains were due to multifamily construction (up 32.2%), however, as the rental market expands in part due to greater difficulty by would-be homeowners to qualify for a mortgage. Housing will continue to remain a focus this week. Existing-home sales numbers are due out at 10:00 a.m. ET today.
Tuesday’s Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a gain of 337.32 points, or 2.87%, and closed at 12,103.58. All of the Dow’s thirty index components ended the session with gains over 1%. The strongest were Caterpillar (CAT) (+5.13%), JP Morgan (JPM) (+4.92%), Home Depot (HD) (+4.35%), and Alcoa (AA) (+4.10%). The SandP 500 ($SPX) finished the session with a gain of 35.95 points, or 2.98%, and closed at 1,241.30. The strongest individual percentage performers in the index were Pulte Group (PHM) (+10.38%), Sprint Nextel Corp. (S) (+9.26%), and Juniper Networks (JNPR) (+8.94%). Only six index components in the SandP 500 ended the session in the red. Red Hat (RHT) (-8.90%) was the weakest. The Nasdaq Composite ($COMPX) ended the session lower by 80.59 points, or 3.19%, on Tuesday and it closed at 2,603.73. The top index components in the Nasdaq-100 ($NDX) were First Solar (FSLR) (+7.80%), Nuance Communications (NUAN) (+6.97%), and F5 Networks (FFIV) (+6.74%). Only Research In Motion (RIMM) (-2.87%) and Green Mountain Coffee Roasters (GMCR) (-0.61%) posted a loss.
The rally on Tuesday fared better than I had initially anticipated, but we did still see the slowdown in the pace of that buying. The largest portion of the rally took place in premarket trade and into the opening bell. The momentum shifted once the 9:45 ET correction period hit. Although the market continued to trend higher throughout the session, it did so with a series of steps higher on the 5 minute time frame with a great deal of overlap from bar to bar on the 15 minute one. This indicated pressure on the bulls to maintain the gains and we began to see what pressure manifest itself into the closing bell. The index futures attempted another push higher once the European sessions began, but the extent of Tuesday’s gains helped create a pattern I call a 2T, which is a form of double top whereby the second high only slightly breaks the first. This creates a bull trap. The result was a pullback in premarket trade that will continue to hinder the bulls as Wednesday kicks off. Currently (8:45 a.m. ET) the market is sitting at support from Tuesday morning and is favoring range-bound action into Wednesday on the 15 minute time frame.
ECONOMIC REPORTS AND EVENTS THIS WEEK
Dec 19 10:00 AM NAHB Housing Market Index Dec Dec 20 8:30 AM Housing Starts Nov Dec 20 8:30 AM Building Permits Nov Dec 21 7:00 AM MBA Mortgage Index 12/17 Dec 21 10:00 AM Existing Home Sales Nov Dec 21 10:30 AM Crude Inventories 12/17 Dec 22 8:30 AM Initial Claims 12/17 Dec 22 8:30 AM Continuing Claims 12/12 Dec 22 8:30 AM GDP – Third Estimate Q3 Dec 22 8:30 AM GDP Deflator – Third Estimate Q3 Dec 22 9:55 AM Michigan Sentiment – Final Dec Dec 22 10:00 AM Leading Indicators Nov Dec 22 10:00 AM FHFA Housing Price Index Oct Dec 23 8:30 AM Durable Orders Nov Dec 23 8:30 AM Durable Goods Orders -ex Transportation Dec Dec 23 8:30 AM Personal Income Nov Dec 23 8:30 AM Personal Spending Nov Dec 23 8:30 AM PCE Prices – Core Nov Dec 23 10:00 AM New Home Sales Nov International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Dec 18 16:00 NZD Westpac NZ Consumer Confidence (4Q) (4Q) Dec 18 19:00 NZD NBNZ Activity Outlook (DEC) Dec 18 19:00 NZD NBNZ Business Confidence (DEC) Dec 18 19:01 GBP Rightmove House Prices (DEC) Dec 19 JPY Cabinet Office Monthly Economic Report Dec 19 18:00 AUD Conference Board Leading Index (OCT) Dec 19 19:01 GBP GfK Consumer Confidence Survey (DEC) Dec 19 19:01 GBP Nationwide Consumer Confidence (NOV) Dec 19 19:30 AUD Reserve Bank’s Board December Minutes*** Dec 19 23:30 JPY All Industry Activity Index (OCT) Dec 20 00:00 JPY Leading Index (OCT F) Dec 20 02:00 EUR German GfK Consumer Confidence Survey (JAN) Dec 20 02:00 EUR German Producer Prices (NOV)*** Dec 20 02:00 CHF Trade Balance (NOV) Dec 20 04:00 EUR German IFO – Business Climate (DEC) Dec 20 04:00 EUR German IFO – Current Assessment (DEC) Dec 20 04:00 EUR German IFO – Expectations (DEC) Dec 20 06:00 GBP CBI Reported Sales (DEC) Dec 20 07:00 CAD Consumer Price Index (NOV)*** Dec 20 07:00 CAD Bank Canada Consumer Price Index Core (NOV)*** Dec 20 08:30 USD Housing Starts (NOV) Dec 20 08:30 USD Building Permits (NOV) Dec 20 16:45 NZD Current Account Balance (3Q) Dec 20 18:50 JPY Merchandise Trade Balance Total (NOV) Dec 20 21:00 NZD Credit Card Spending (NOV) Dec 21 JPY Bank of Japan Rate Decision (DEC 21)*** Dec 21 04:30 GBP Bank of England Minutes*** Dec 21 04:30 GBP Public Finances (PSNCR) (NOV) Dec 21 04:30 GBP PSNB ex Interventions (NOV) Dec 21 04:30 GBP Public Sector Net Borrowing (NOV) Dec 21 08:30 CAD Retail Sales (OCT) Dec 21 10:00 EUR Euro-Zone Consumer Confidence (DEC A) Dec 21 10:00 USD Existing Home Sales (NOV) Dec 21 16:45 NZD Gross Domestic Product (3Q)*** Dec 22 00:00 JPY Bank of Japan Monthly Economic Report Dec 22 04:30 GBP Gross Domestic Product (3Q F)*** Dec 22 04:30 GBP Current Account (3Q) Dec 22 04:30 GBP Total Business Investment (3Q F) Dec 22 08:30 USD Gross Domestic Product (Annualized) (3Q T)*** Dec 22 08:30 USD Personal Consumption (3Q T) Dec 22 08:30 USD Gross Domestic Product Price Index (3Q T)*** Dec 22 08:30 USD Core Personal Consumption Expenditure (3Q T) Dec 22 09:55 USD U. of Michigan Confidence (DEC F)*** Dec 22 10:00 USD Leading Indicators (NOV) Dec 23 04:30 GBP BBA Loans for House Purchase (NOV) Dec 23 08:30 USD Durable Goods Orders (NOV)*** Dec 23 08:30 USD Durables Ex Transportation (NOV) Dec 23 08:30 CAD Gross Domestic Product (OCT)*** Dec 23 08:30 USD Personal Income (NOV) Dec 23 08:30 USD Personal Spending (NOV) Dec 23 10:00 USD New Home Sales (NOV)
*** 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 19, 2011 Before: – During: – After: RHT Tuesday, Dec 20, 2011 Before: CAG, GIS, JEF, NAV, SAFM During: – After: FSII, JBL, NKE, ORCL, PAYX, SHFL, STND Wednesday, Dec 21, 2011 Before: ATU, KMX, SHAW, WAG During: – After: BBBY, FINL. MLHR, LUB, SCS, TIBX Thursday, Dec 22, 2011 Before: AM, NEOG During: – After: CAMP, CBK Friday, Dec 23, 2011 Before: – During: – After: 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
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