October 26, 2011
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Daily Commentary
EU Regains the Spotlight (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 October 25, 2011 (5:15 p.m. ET): Closing Prices: DOW 11,706.62 (-207.00, -1.74%), SandP 500 1,229.05 (-25.14, -2.00%), NASDAQ 2,638.42 (-61.02, -2.26%), Nikkei 225 8,762.31 (-81.67, -0.92), DAX 6,046.75 (-8.52, -0.14%), FTSE 5,525.54 (-22.52, -0.41%) OIL 92.44, GOLD 1,706.30, SILVER 33.21 EURO 1.3906, YEN 76.04, BRITISH POUND 1.6001, U.S. DOLLAR INDEX 76.45 Swift Reaction Follows Daily Resistance The indices struck strong daily resistance ahead of Tuesday’s session (200-day moving averages in the SandP 500 and Dow Jones Ind. Average), making it difficult for the indices to push higher yesterday. As we headed into the day’s session, the index futures were also experiencing trend exhaustion. Both the SandP ($SPX) and Dow ($DJI) had three highs after a strong initial run into Friday’s open. Next they established longer periods of gradual correction, followed by a fourth high. This was repeated with another slightly higher high in the Dow ahead of Tuesday’s open. As discussed in yesterday’s column, this type of trend combination will typically lead to a break in the uptrend channel, whereby the market is unable to further sustain higher highs and higher lows and a larger correction typically occurs. Dow Jones Industrial Average (Figure 1) On Tuesday the selling began early. The slightly higher highs in all three indices that took place into 7:00 a.m. ET triggered a bull trap I call a 2T (2 tops) on the 15 minute time frame. Since the pace slowed into the second high on both the Dow and Nasdaq compared to earlier buying, it created an excellent shorting opportunity on the 15 minute time frame. The pace of the reversal off premarket highs increased into Tuesday’s opening bell following news that EU finance ministers would not be meeting ahead of Wednesday’s summit as anticipated. A two-wave continuation pattern in the form of a triangle continued the selloff into the closing bell. Tuesday’s Economic Reports The morning’s economic data releases had very little impact upon the session’s price action on Tuesday. The SandP/Case-Shiller 20-City Housing Price Index fell 3.8% in August, which was in line with expectations. In July it had fallen 4.1%. Later,the Consumer Confidence Index came in lower at 39.8, which was its worst reading in over two years and less than the anticipated reading of 46.0. SandP 500 (Figure 2) Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a loss of 207.00 points, or 1.74%, and closed at 11,706.62. Out of the Dow’s thirty index components, only Cisco Systems (CSCO) (+0.46%) and Intel (INTC (+0.16%) posted a gain. The top decliners were 3M (MMM) (-6.25%), Alcoa (AA) (-4.16%), Bank of America (BAC) (-3.87%), and Hewlett-Packard (HPQ) (-3.73%). 3M missed earnings estimates and weighed heavily on the Dow. The SandP 500 ($SPX) finished the session with a loss of 25.14 points, or 2.00%, and closed at 1,229.05. None of the index’s industry groups managed to end the session with a gain. Top percentage performers in the index were Quest Diagnostics Inc. (DGX) (+10.83%), Sherwin Williams Co. (SHW) (+1.92%), and Masco Corp. (MAS) (+1.71%). The weakest industry groups were the financials (-3.1%) and materials (-2.5%). The weakest percentage performer was Netflix (NFLX) with a loss of 34.90% after announcing on Monday that it lost 800,000 subscribers in the U.S. during its last quarter. It was followed by another strong decliner: First Solar (FSLR), which fell 25.33% (most of it in the afternoon) after it announced that its CEO, Rob Gillette, is leaving the company. AK Steel Holding Corp. (AKS) (-13.64%) and SLM Corp. (SLM) were the other double digit percentage losers. The Nasdaq Composite ($COMPX) ended the session lower by 61.02 points, or 2.26%, on Tuesday and it closed at 2,638.42. The strongest performer in the Nasdaq-100 ($NDX) was Illumina Inc. (ILMN) (+7.24%). Only eight posted a gain. ILMN was followed by Warner Chilcott Plc. (+0.98%) and Liberty Interactive Corporation (LINTA) (+0.64%). The weakest percentage performers were Netflix (NFLX) (-34.90%), First Solar (FSLR) (-25.33%) and Green Mountain Coffee (GMCR) (-12.18%). Nasdaq Composite (Figure 3) OUTLOOK On Wednesday the focus shifts back to the European Union. Although the U.S. data includes September’s durable goods orders and new home sales, in addition to another round of earnings, European leaders are expected to unveil a plan to deal with its own debt crisis. The index futures have been trading nearly flat overnight in anticipation of the announcement. From a technical standpoint the futures are creating a 15 minute Phoenix pattern heading into the last hour of trade before the opening bell. This is a bullish pattern and since the pace of the buying overnight was slower, this pattern often has stronger-than-average upside follow-through. Any disappointment out of Europe, however, could easily squash the move.
ECONOMIC REPORTS AND EVENTS THIS WEEK
U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Oct 25 9:00 AM Case-Shiller 20-city Index Aug Oct 25 10:00 AM Consumer Confidence Oct Oct 25 10:00 AM FHFA Housing Price Index Aug Oct 26 7:00 AM MBA Mortgage Index 10/22 Oct 26 8:30 AM Durable Orders Sep Oct 26 8:30 AM Durable Orders -ex Transportation Sep Oct 26 10:00 AM New Home Sales Sep Oct 26 10:30 AM Crude Inventories 10/22 Oct 27 8:30 AM Initial Claims 10/22 Oct 27 8:30 AM Continuing Claims 10/15 Oct 27 8:30 AM GDP-Adv. Q3 Oct 27 8:30 AM GDP Deflator Q3 Oct 27 10:00 AM Pending Home Sales Aug Oct 28 8:30 AM Personal Income Sep Oct 28 8:30 AM Personal Spending Sep Oct 28 8:30 AM PCE Prices – Core Sep Oct 28 8:30 AM Employment Cost Index Q3 Oct 28 9:55 AM Michigan Sentiment -Final Oct International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Oct 23 19:50 JPY Merchandise Trade Balance Total (SEP) Oct 23 20:30 AUD Producer Price Index (3Q)*** Oct 24 03:30 EUR German Purchasing Manager Index Manufacturing (OCT A) Oct 24 03:30 EUR German Purchasing Manager Index Services (OCT A) Oct 24 04:00 EUR Euro-Zone Purchasing Manager Index Composite (OCT A) Oct 24 04:00 EUR Euro-Zone Purchasing Manager Index Manufacturing (OCT A) Oct 24 04:00 EUR Euro-Zone Purchasing Manager Index Services (OCT A) Oct 24 05:00 EUR Euro-Zone Industrial New Orders (AUG) Oct 24 08:30 USD Chicago Fed Nat Activity Index (SEP) Oct 24 17:45 NZD Consumer Prices Index (3Q)*** Oct 24 19:00 AUD Conference Board Leading Index (AUG) Oct 25 02:00 EUR German GfK Consumer Confidence Survey (NOV) Oct 25 02:00 CHF UBS Consumption Indicator (SEP) Oct 25 04:30 GBP BBA Loans for House Purchase (SEP) Oct 25 04:30 GBP Current Account (2Q) Oct 25 08:30 CAD Retail Sales (AUG) Oct 25 09:00 CAD Bank of Canada Rate Decision (OCT 25)*** Oct 25 10:00 USD Consumer Confidence (OCT)*** Oct 25 10:00 USD House Price Index (AUG) Oct 25 20:00 NZD NBNZ Activity Outlook (OCT) Oct 25 20:00 NZD NBNZ Business Confidence (OCT) Oct 25 20:30 AUD Consumer Prices Index (3Q)*** Oct 25 20:30 AUD Consumer Prices Index RBA Trimmed Mean (3Q)*** Oct 25 20:30 AUD Consumer Prices Index RBA Weighted Median (3Q)*** Oct 26 04:00 EUR ECB Publishes its Bank Lending Survey*** Oct 26 08:30 USD Durable Goods Orders (SEP)*** Oct 26 08:30 USD Durables Ex Transportation (SEP) Oct 26 10:00 USD New Home Sales (SEP) Oct 26 10:30 CAD Monetary Policy Report*** Oct 26 16:00 NZD Reserve Bank of New Zealand Rate Decision (OCT 27)*** Oct 26 17:45 NZD Trade Balance (SEP) Oct 26 17:45 NZD Balance (YTD) (SEP) Oct 26 19:50 JPY Retail Trade (SEP) Oct 26 19:50 JPY Large Retailers’ Sales (SEP) Oct 26 22:00 CNY Industrial Profits YTD (SEP) Oct 27 JPY Bank of Japan Rate Decision (OCT 27)*** Oct 27 EUR German Retail Sales (SEP) Oct 27 05:00 EUR Euro-Zone Business Climate Indicator (OCT) Oct 27 06:00 GBP CBI Reported Sales (OCT) Oct 27 08:30 USD Gross Domestic Product (Annualized) (3Q A)*** Oct 27 08:30 USD Personal Consumption (3Q A) Oct 27 08:30 USD Gross Domestic Product Price Index (3Q A)*** Oct 27 08:30 USD Core Personal Consumption Expenditure (3Q A) Oct 27 10:00 USD Pending Home Sales (SEP) Oct 27 19:01 GBP GfK Consumer Confidence Survey (OCT) Oct 27 19:30 JPY Household Spending (SEP) Oct 27 19:30 JPY Jobless Rate (SEP) Oct 27 19:30 JPY National Consumer Price Index (SEP) Oct 27 19:30 JPY National Consumer Price Index Ex-Fresh Food (SEP) Oct 27 19:30 JPY National Consumer Price Index Ex Food, Energy (SEP) Oct 27 19:50 JPY Industrial Production (SEP P) Oct 28 EUR German Consumer Price Index (OCT P) Oct 28 EUR German Consumer Price Index – EU Harmonised (OCT P) Oct 28 05:30 CHF KOF Swiss Leading Indicator (OCT) Oct 28 08:30 USD Personal Income (SEP) Oct 28 08:30 USD Personal Spending (SEP) Oct 28 08:30 USD Personal Consumption Expenditure Deflator (SEP) Oct 28 08:30 USD Personal Consumption Expenditure Core (SEP) Oct 28 09:55 USD U. of Michigan Confidence (OCT F)*** *** 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, Oct 24, 2011 Before: BOH, BMRC, CAT, ETN, IVZ, KMB, LO, PCH, RDCM, RSH, ROP, STBA, BSRR, SILC, VFC During: – After: FUBC, AAN, ADVS, ALB, AMGN, ANEN, BXS, CSBC, CFX, CTGX, CR, CYBE, EGBN, FDEF, FIBK, FTNT, HBHC, HMA, HSTM, HWAY, HTLF, HLX, HXL, HUBG, ININ, KALU, MAS, NARA, NFLX, OMI, PCL, PLXT, RGA, RCII, RUSHA, RUSHB, SQNS, STAA, SFG, STSA, STM, TXN, TUES, UCTT, UIS, USTR, VECO, VLTR, WASH, WPP, WSH, ZION Tuesday, Oct 25, 2011 Before: MMM, AMG, AGCO, AKS, AME, AXE, AIT, ARB, ARMH, ASTE, AUO, ALV, BP, CP, CAJ, CPLA, CSL, CRS, CE, CNC, CLFC, CRDN, CHFC, CIT, COLM, CMI, CYNO, DB, DORM, DD, ECL, GPI, HSII, HBCP, IIVI, ITW, IMN, IRM, JRN, LCAV, LII, LXK, LRY, MHP, MOLX, NOV, NVS, NUS, ODP, OCR, OFG, PCAR, BTU, PVTB, DGX, RYN, RF, RAI, RNOW, R, SHW, SIAL, SPG, SAH, SUI, TROW, XRS, AMTD, TECH, TFX, TLAB, TNC, TWIN, UBS, UA, UBSI, UPS, X, VIST, GRA, WAB, WDR, WAT, WFT, WIBC, XRX During: FRME, QCOR After: ABAX, AKR, ACE, ACPW, ATRM, ARE, AFOP, AMZN, ACC, AGNC, AFG, AMSG, ACGL, AJG, ACLS, BGS, BCDS, BHLB, BPFH, BXP, BBNK, BRCM, CHRW, BCR, CBT, CNI, CENX, CHE, CBI, CBU, CPTS, CNO, CCI, CTS, DDIC, DFG, DV, DMRC, DHT, DWA, EHTH, EXAR, EXM, ESRX, FFIV, FBC, FTI, HTS, HGSI, BIN, ILMN, INSU, IRBT, KONA, LPS, LIFE, LNET, MTW, MASI, MTSN, MCK, MRCY, MMSI, MSL, MOH, NBR, PNRA, PVR, PVSW, QEP, KWR, STR, QDEL, RPT, RRC, RA, RFMD, SBX, SIMG, SONO, SXL, SMCI, SUPX, SKT, TSS, TRN, TRMK, ULTI, USNA, VASC, VICR, VOCS, WBSN, WSBC, WU, WTFC, ZIXI Wednesday, Oct 26, 2011 Before: ABD, ACXM, ATI, AGN, AB, AEP, ANAD, ARW, ABG, ADP, AVY, AVX, BEAV, BMS, BA, EAT, BKI, CBZ, CETV, COP, GLW, CFR, DPS, EEFT, EXC, FISI, FMBI, FSRV, F, GD, HES, HSP, HCBK, HVB, INOD, SNAK, ITRI, JBLU, JNY, KVHI, LAD, LMT, LPLA, MPX, MKTX, MWV, MHS, MDCO, MDP, MSM, MYL, NDAQ, NOC, NWE, OC, PNR, POL, PX, PLD, RDWR, ROL, RES, RUTH, SFE, SAIA, SAP, SCG, SEE, SLGN, SLAB, SO, SPAR, SPNC, S, SSYS, TMO, TOBC, TUP, UMBF, UMC, USAP, VCI, VSI, WLP, WYN During: BOKF, ENI, FFNW, GCBC, PEBK After: SHLM, ATX, AFL, AEM, AKAM, ALGT, EPAX, ARII, AMP, AP, ACOM, ATR, AIZ, AXTI, BYI, BMC, BDN, CA, COG, CDNS, CWT, CGI, CHH, CHDN, CVGI, CYH, CMP, CMRE, CSGP, PROJ, DEL, DGLY, DRE, DXPE, EDAC, EDMC, ESIO, EGN, ENTG, EFX, EQIX, EQR, RE, DAVE, FCBC, FXCB, GG, GGG, GPRE, HGR, HRS, HRC, IBKC, ICAD, ISSI, ISH, ISIL, ITC, JAH, KBR, KEX, KNX, LOGI, LOGM, LOOP, LSI, MLNX, MX, MRH, MORN, NANX, NATI, NSC, NVLS, ORLY, OII, OSBC, OTEX, TIS, OI, PMTC, PLXS, PZN, RYL, SIGI, SFLY, SJW, SLG, SOA, STNR, SRCL, SFSF, SPN, SUSQ, SYMC, SYA, SYMM, TCLP, TER, TEX, TMK, TRH, TQNT, TBI, TYL, UAM, USMO, V, WRB Thursday, Oct 27, 2011 Before: FLWS, ABB, ACIW, AET, ARG, AIXG, ASPS, AGEN, AEGR, ACAT, ART, AZN, AVT, AVP, BLL, ABX, BDC, BHE, BGCP, BMY, BC, BG, CAB, CCMP, CAM, CRR, CAH, CDI, CELG, CVE, CEVA, CHG, GTLS, CTXS, CWEI, CLW, CMS, CNH, CCE, CL, CLP, COLB, CNMD, CNX, CPO, OFC, CRAI, CRY, DAN, DLX, XRAY, DBD, DLR, UFS, DGICA, DOW, DSPG, EXP, ELNK, ELN, EME, ENDP, EXXI, EFSC, EQT, XOM, FBRC, FDML, FOE, FAF, FCF, FORR, BEN, GOLF, GR, GTI, GPX, HSC, HHS, HPY, HSY, HEP, ICLR, INCY, IP, IVC, JCI, KEM, KMT, LLL, LAZ, LM, LBY, LECO, LINE, LKQX, LYTS, LL, CLI, MGLN, MF, MTRN, MJN, MTH, MSA, MOD, MGI, MWW, MCO, MSI, BABY, NCI, NXY, NLSN, NIHD, OXY, OMX, ODFL, ORI, PACR, PMTI, PEI, PRGO, PFCB, PNK, POT, PCP, PG, PSSI, PHM, PMT, QSII, RVSN, RTN, O, RS, REV, DDD, SIX, SWI, SAVE, HOT, STEL, STC, SRI, SURW, SNV, TCK, TDY, THRD, BCO, TWC, TKR, TWI, BZC, UCBI, VLY, VDSI, VMED, WBC, WM, WMAR, WEST, WEC, WRLD, XEL, YNDX, ZMH During: CHU, ICA, GRC, NVO, LCC After:AMD, ALGN, AMCC, ARBA, AHL, AVID, BIDU, RATE, BMRN, CELL, BMTC, CAP, ELY, CALD, CSE, CFK, CERN, CINF, CRBC, CLF, CLD, CSTR, CPSI, CTCT, CROX, CW, CYTK, DECK, DLA, DDR, DLLR, DRIV, DCOM, DNB, EMN, EDR, ERTS, ECHO, ELX, ENH, EPIQ, EXPE, EXR, FII, FEIC, FFCH, FPO, FLS, FFIC, FORM, GCAP, GILD, GBCI, GRT, GB, GDOT, GSIT, GIFI, HLIT, HLS, HEOP, HIW, AWAY, IKAN, IMGN, IBA, IM, INAP, INPH, ISBC, ITI, JDAS, KEG, KLAC, LEG, LMAT, MET, MCRL, MCRS, MTX, MIPS, MPWR, MMI, NANO, NCR, UEPS, NTGR, NR, NST, NUVA, OLN, ASGN, OFIX, PEB, PMCS, PWER, PFG, QLIK, QLGC, QTM, RSYS, RGC, RVSB, SCSC, SENEA, SHOR, SSD, SONS, SWN, CODE, SPSC, STMP, SPF, STRT, SPRT, TSYS, TNAV, EDE, THRX, TORM, UHS, VR, VAR, WOOF, VRSN, VRTX, VPFG, VPRT, WBCO, WRE Friday, Oct 28, 2011 Before: AHGP, ARLP, AXL, AGP, AIV, ACI, ABFS, B, BIIB, BWA, CVC, CPN, CVX, KOF, CMCO, CMC, CEG, CVH, D, EBTX, FMX, GHM, HFWA, HMSY, IPG, LEA, LPNT, MRK, NPBC, NWL, NEM, NS, NSH, OB, OPY, PPC, PFS, RAS, COL, SCBT, SHPGY, SR, TEN, GT, TAC, WTBA, WCBO, WY During: UBCP After: BVN, EEQ, EEP
Note: Alleconomic 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=
