December 6, 2011

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MONDAY’S MARKET WRAP-UP

Market Snapshot for December 5, 2011 (3:10 a.m. ET, Dec.6 ): Closing Prices: DOW 12,097.83 (+78.41, +0.65%), SandP 500 1,257.08 (+12.80, +1.03%), NASDAQ 2,655.76 (+28.82, +1.1%), Nikkei 225 8,575.16 (-120.82, -1.39%), DAX 6,025.19 (-80.90, -1.32%), FTSE 5,543.99 (-23.97, -0.43%) OIL 100.59, GOLD 1,719.60, SILVER 32.105 EURO 1.3366,YEN 77.75, BRITISH POUND 1.5634, U.S. DOLLAR INDEX 78.885 Rally Crushed Monday by Threat of SandP Ratings Cuts Throughout EU After strong rallies last week, the market was hit with a blow on Monday after Standard and Poor’s placed the credit ratings of more than a dozen European nations on credit watch negative for a potential downgrade. The credit watch included all 15 of the euro-zones remaining countries. Portugal and Greece had already been downgraded to junk status. The market was already skating on thin ice as Monday’s session began. The indices struck strong price resistance from last month’s highs late last week after a sharp rally, leaving them still extended on the intraday time frames heading into the new week. As Monday’s session began, we were already on the look-out for the possibility of a pullback. At first, however, the indices began their correction through time, falling into a trading range that lasted throughout the morning and into the early afternoon with the indices holding resistance heading into the 10:45 ET correction period. Then came the SandP news and stock prices plummeted. (Note: The SandP went further on Tuesday morning by announcing that it was also placing the European Financial Stability Facility (EFSF) on negative watch.)

MONDAY INDEX WRAP-UP

The Dow Jones Industrial Average ($DJI) ended the day on Monday with a gain of 78.41 points, or 0.65%, and closed at 12,097.83. Twenty-four of the Dow’s thirty index components posted a gain. The top performers were JP Morgan (JPM) (+3.65%), Bank of America (BAC) (+2.66%), DuPont (DD) (+2.04%), and Microsoft (MSFT) (+1.90%). The weakest performers were Merck (MRK) (-0.62%) and McDonalds (MCD) (-0.37%). The SandP 500 ($SPX) finished the session with a gain of 12.80 points, or 1.03%, and closed at 1,257.08. The strongest sectors on Monday included financials, oil and gas equipment and services, and metals and mining stocks. The strongest individual percentage performers in the index were Tenet Healthcare (THC) (+12.44%), Gannett Inc. (GCI) (+10.24%), Morgan Stanley (MS) (+6.77%), and Titanium Metals Corp. (TIE) (+6.71%). The weakest were Washington Post (WPO) (-4.46%) and Newfield Expl. (NFX) (-3.44%). The Nasdaq Composite ($COMPX) ended the session higher by 28.83 points, or 1.1%, on Monday and it closed at 2,655.76. The top index components in the Nasdaq-100 ($NDX) were Illumina Inc. (ILMN) (+5.98%), Netflix (NFLX) (+5.65%), and Staples (SPLS) (+5.58%). The weakest were Alexion Pharmaceuticals (ALXN) (-2.81%) and Sirius XM Radio (SIRI) (-2.69%).

Correction Periods Play Pivot Roles in Intraday Price Action The selling pressure in the market resumed had resumed on Monday at the 15:00 ET correction period after the market paused at 5 minute, 200 period moving average support 30 minutes after the initial wave of selling kicked off. The market remained under pressure afterhours, but the pace of the selling slowed and by the time the European markets opened we were already seeing some recovery action in the form of a 15 minute Phoenix as the index futures hugged 15 minute 20 period moving average resistance. The buy trigger came at 3:00 a.m. ET and the recovery continued into mid-morning when the Dow Jones Ind. Average ($DJI) struck price resistance from Monday’s breakdown zone. This zone hit at the same time as the 10:45 ET correction period that served to help put a halt on Monday’s rally. Nasdaq Composite (Figure 3) OUTLOOK Getting Technical in Tuesday’s Trade As Tuesday’s session progresses, the market is going to continue to face stiff resistance from November’s highs. Slightly higher highs on the 30-minute charts this month in the SandP created bull traps, while a triangle on that same time frame in the Nasdaq threatens further weakness in the short term. On the five minute time frame the indices are also facing a struggle with the onset of the 10:45 ET correction period. The market had established an initial wave of buying on the intraday charts in the final 30 minutes of trade on Monday. This was followed by a secondary move higher into the 10:45 ET zone, but the pace was more gradual, weakening the move and leading me to post a corrective bias on that time frame for those who follow me on Facebook. Getting more than the smaller, intraday scalps off the 5 minute charts will be difficult for index traders today.

ECONOMIC REPORTS AND EVENTS THIS WEEK

Dec 5 10:00 AM Factory Orders Oct Dec 5 10:00 AM ISM Services Nov Dec 7 7:00 AM MBA Mortgage Index 12/03 Dec 7 10:30 AM Crude Inventories 12/03 Dec 7 3:00 PM Consumer Credit Oct Dec 8 8:30 AM Initial Claims 12/03 Dec 8 8:30 AM Continuing Claims 11/26 Dec 8 10:00 AM Wholesale Inventories Oct Dec 9 8:30 AM Trade Balance Oct Dec 9 9:55 AM Mich Sentiment Dec International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Dec 4 17:30 AUD AiG Performance of Service Index (NOV) Dec 4 18:30 AUD TD Securities Inflation (NOV) Dec 5 03:55 EUR German Purchasing Manager Index Services (NOV F) Dec 5 04:00 EUR Euro-Zone Purchasing Manager Index Composite (NOV F) Dec 5 04:00 EUR Euro-Zone Purchasing Manager Index Services (NOV F) Dec 5 04:30 EUR Euro-Zone Sentix Investor Confidence (DEC) Dec 5 04:30 GBP Purchasing Manager Index Services (NOV) Dec 5 05:00 EUR Euro-Zone Retail Sales (OCT)*** Dec 5 10:00 USD ISM Non-Manufacturing Composite (NOV) Dec 5 10:00 USD Factory Orders (OCT) Dec 5 19:30 AUD Current Account Balance (3Q) Dec 5 22:30 AUD Reserve Bank of Australia Rate Decision (DEC 6)*** Dec 6 03:15 CHF Consumer Price Index (NOV) Dec 6 03:15 CHF CPI – EU Harmonised (NOV) Dec 6 05:00 EUR Euro-Zone Gross Domestic Product s.a. (3Q P)*** Dec 6 05:00 EUR Euro-Zone Household Consumption (3Q P) Dec 6 05:00 EUR Euro-Zone Gross Fixed Capital (3Q P) Dec 6 06:00 EUR German Factory Orders s.a. (OCT) Dec 6 09:00 CAD Bank of Canada Rate Decision (DEC 6)*** Dec 6 10:00 CAD Ivey Purchasing Managers Index SA (NOV) Dec 6 17:30 AUD AiG Performance of Construction Index (NOV) Dec 6 19:30 AUD Gross Domestic Product (3Q)*** Dec 7 00:00 JPY Leading Index (OCT P) Dec 7 01:45 CHF Unemployment Rate (NOV) Dec 7 03:15 EUR ECB Calls for Bids in 3-Month Dollar Tender Dec 7 04:30 GBP Industrial Production (OCT) Dec 7 04:30 GBP Manufacturing Production (OCT) Dec 7 05:00 EUR ECB Announces Allotment in 3-Month Dollar Tender Dec 7 06:00 EUR German Industrial Production n.s.a. and w.d.a. (OCT) Dec 7 10:00 GBP NIESR Gross Domestic Product Estimate (NOV)*** Dec 7 15:00 USD Consumer Credit (OCT) Dec 7 15:00 NZD Reserve Bank of New Zealand Rate Decision (DEC 8)*** Dec 7 16:45 NZD Manufacturing Activity (3Q) Dec 7 18:50 JPY Trade Balance – BOP Basis (OCT) Dec 7 18:50 JPY Machine Orders (OCT) Dec 7 19:30 AUD Part Time Employment Change (NOV) Dec 7 19:30 AUD Full Time Employment Change (NOV) Dec 7 19:30 AUD Employment Change (NOV)*** Dec 7 19:30 AUD Unemployment Rate (NOV)*** Dec 7 23:30 JPY Bankruptcies (NOV) Dec 8 JPY Eco Watchers Survey: Current (NOV) Dec 8 JPY Eco Watchers Survey: Outlook (NOV) Dec 8 07:00 GBP BOE Asset Purchase Target (DEC)*** Dec 8 07:00 GBP Bank of England Rate Decision (DEC 8)*** Dec 8 07:45 EUR European Central Bank Rate Decision (DEC 8)*** Dec 8 08:15 CAD Housing Starts (NOV) Dec 8 10:30 CAD Bank of Canada Publishes Financial System Review*** Dec 8 16:45 NZD NZ Card Spending – Retail (NOV) Dec 8 16:45 NZD NZ Card Spending (NOV) Dec 8 18:50 JPY BSI Large All Industry (4Q) Dec 8 18:50 JPY BSI Large Manufacturing (4Q) Dec 8 18:50 JPY Nominal Gross Domestic Product (3Q F)*** Dec 8 18:50 JPY Gross Domestic Product Annualized (3Q F)*** Dec 8 18:50 JPY Gross Domestic Product (3Q F)*** Dec 8 21:00 CNY Producer Price Index (NOV)*** Dec 9 CNY Industrial Production (NOV) Dec 9 CNY Fixed Assets Inv Excl. Rural YTD (NOV) Dec 9 CNY Retail Sales YTD (NOV) Dec 9 EUR ECB Publishes Dec. Monthly Report*** Dec 9 02:00 EUR German Consumer Price Index (NOV F)*** Dec 9 02:00 EUR German Consumer Price Index – EU Harmonised (NOV F)*** Dec 9 02:00 EUR German Trade Balance (OCT) Dec 9 04:30 GBP Producer Price Index Input n.s.a. (NOV) Dec 9 04:30 GBP Producer Price Index Output n.s.a. (NOV) Dec 9 04:30 GBP Producer Price Index Output Core n.s.a. (NOV) Dec 9 04:30 GBP Visible Trade Balance (OCT) Dec 9 08:30 USD Trade Balance (OCT) Dec 9 09:55 USD U. of Michigan Confidence (DEC P)*** *** Highly influentialNotice: 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 5, 2011 Before: DG, IMKTA, TSTF During: – After: LRAD, MLNK, PBY Tuesday, Dec 6, 2011 Before: AZO, BMO, LDR, LQDT, TOL, TTC During: HOFT After: MW, MIND, NCS, REXI, SAI, TIER, VRA, VTSS Wednesday, Dec 7, 2011 Before: CBAK, MTN During: – After: CHKE, GIII, GEF, INTL, PSUN, PLAB Thursday, Dec 8, 2011 Before: CIEN, CONN, COST, IEC, LAYN, MPR, SFD, TITN During: – After: ALOG, COO, DAEG, FLOW, GBDC, HRB, ODC, PLL, SEAC, SWHC Friday, Dec 9, 2011 Before: FGP, KMGB, OYOG 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

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=