January 12, 2011
An online version of this newsletter is available at http://www.tonihansen.com/Newsletters/current.html.
DAILY COMMENTARY
Still Stuck! (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 11, 2011 (10:30 p.m. ET): Closing Prices: DOW 12,449.45 (-13.02, -0.1%), SandP 500 1,292.48 (+0.4, +0.03%), NASDAQ 2,710.76 (+8.26, +0.31%), Nikkei 225 8,369.53 (-78.35, -0.93%), DAX 6,152.34 (-10.64, -0.17%), FTSE 5,670.82 (-25.88, -0.45%) OIL 101.24, GOLD 1,643.80, SILVER 29.995 EURO 1.2717, YEN 76.86, BRITISH POUND 1.5309, U.S. DOLLAR INDEX 81.52
It’s been a tough couple of weeks! As much as I’d love to say how wonderful the market has been so far this year, it’s actually been a more difficult time. This is particularly true for daytraders. Light volume, strong resistance, and global uncertainty has led to a lack of conviction intraday for the better part of many of the recent sessions. This can be witnesses in the narrower trading ranges since late December and the greater degree of overlap from one bar to the next on 5 minute, 15 minute, and even daily time frames. The result of this type of action is the need to lower reward expectations compared to risk. Where the market often gave setups of 2:1 reward to risk or higher, many traditional technical patterns are now offering 1:1 or less! There are of course exceptions, but lately many of those have taken place outside regular market hours. Few days, however, have been as difficult as Wednesday’s.
Once again, the strongest price moves took place outside regular market hours. A solid buy triggered into the start of the day just past midnight when the weakness from the previous session hit support and momentum shifted into the start of the new day. The index futures steadily retraced the prior afternoon’s losses, and, although the pace was still more gradual than the previous morning, the narrow channel into premarket highs meant better reward potential for a reversal. This reversal off those highs began several hours prior to the New York open. The market was already reacting to support by the time the opening bell rang on Wednesday morning and the indices moved higher throughout the day, but the higher degree of overlap (as seen on the 5 and 15 minute charts) continued to make things more tricky than usual. Technical setups did hold (witness the Dow’s price action), but the session felt more like a pre-holiday session than one taking place more than a week past the new year.
INDEX WRAP-UP
The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a loss of 13.02 points, or 0.1%, and closed at 12,449.45. Just under half of the Dow’s thirty index components posted a gain. The strongest performers were Bank of America (BAC) (+3.62%), Alcoa (AA) (+2.01%), and JP Morgan (JPM) (+1.69%). The weakest were Disney (DIS) (-2.35%), Coca-Cola (KO) (-1.85%), and Chevron (CVX) (-1.18%). The SandP 500 ($SPX) finished the session with a gain of 0.4 points, or 0.03%, and closed at 1,292.48. The top performing industry groups were once again the financials (+1.0%) and materials (+1.0%). The strongest individual percentage performers in the index were Sears Holdings Corp. (SHLD) (+8.01%), First Solar (FSLR) (+7.82%), and Genworth (GNW) (+7.29%). Losses were the largest in energy (-1.3%). The weakest were Urban Outfitters (URBN) (-18.63%), SuperValu (SVU) (-12.51%), and Cabot Oil and Gas (COG) (-11.16%). The Nasdaq Composite ($COMPX) ended the session higher by 8.26 points, or 0.31%, on Wednesday and it closed at 2,710.76. The strongest performers in the Nasdaq-100 ($NDX) were Sears Holdings Corp. (SHLD) (+8.01%), First Solar (FSLR) (+7.82%), and Wynn Resorts (WYNN) (+4.05%). The weakest were Netflix (NFLX) (-3.84%), Monster Beverage Corp. (MNST) (-2.99%), and Marvell Technology Group (MRVL) (-2.24%).
We should start to see things pick up here as early as Thursday. Initial jobless claims, retail sales for the past month, and November’s business inventory data are just a few of the headlines the market will be following. The European Central Bank will also be releasing its latest interest rate decision. As far as a technical bias is concerned, there isn’t much at this point to change my outlook compared to yesterday. The bulls still need to be more cautious and intraday momentum shifts should be closely monitored since the daily time frames have room to offer a strong 60-minute swing either way. This will depend upon how the channel of the past two weeks breaks. Slower downside momentum followed by a break in the upper channel will allow the market to move more securely to prior highs, but if the market holds a slightly higher high once again on the 60-minute charts, particularly if it slows into that high, then we have a better chance of seeing a Momentum Reversal (TM) trigger. This would lead to another rapid drop on the daily charts.
ECONOMIC REPORTS AND EVENTS THIS WEEK
Jan 9 3:00 PM Consumer Credit Nov Jan 10 10:00 AM Wholesale Inventories Nov Jan 11 7:00 AM MBA Mortgage Purchase Index 01/07 Jan 11 10:30 AM Crude Inventories 01/07 Jan 11 2:00 PM Fed’s Beige Book Jan Jan 12 8:30 AM Initial Claims 01/07 Jan 12 8:30 AM Continuing Claims 12/31 Jan 12 8:30 AM Retail Sales Dec Jan 12 8:30 AM Retail Sales ex-auto Dec Jan 12 10:00 AM Business Inventories Nov Jan 12 2:00 PM Treasury Budget Dec Jan 13 8:30 AM Trade Balance Nov Jan 13 8:30 AM Export Prices ex-ag. Dec Jan 13 8:30 AM Import Prices ex-oil Dec Jan 13 9:55 AM Mich Sentiment Jan International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Jan 12 JPY Eco Watchers Survey: Current (DEC) Jan 12 JPY Eco Watchers Survey: Outlook (DEC) Jan 12 01:00 JPY Machine Tool Orders (DEC P) Jan 12 02:00 EUR German Consumer Price Index (DEC F)*** Jan 12 02:00 EUR German Consumer Price Index – EU Harmonised (DEC F)*** Jan 12 04:30 GBP Industrial Production (NOV) Jan 12 04:30 GBP Manufacturing Production (NOV) Jan 12 05:00 EUR Euro-Zone Industrial Production w.d.a. (NOV) Jan 12 07:00 GBP BOE Asset Purchase Target (JAN)*** Jan 12 07:00 GBP Bank of England Rate Decision (JAN 12)*** Jan 12 07:45 EUR European Central Bank Rate Decision (JAN 12)*** Jan 12 08:30 USD Advance Retail Sales (DEC)*** Jan 12 08:30 USD Retail Sales Less Autos (DEC) Jan 12 08:30 USD Retail Sales Ex Auto and Gas (DEC) Jan 12 10:00 USD Business Inventories (NOV) Jan 12 10:00 GBP NIESR Gross Domestic Product Estimate (DEC)*** Jan 12 14:00 USD Monthly Budget Statement (DEC) Jan 12 23:00 JPY Bankruptcies (DEC) Jan 13 CNY Industrial Production YTD (DEC) Jan 13 CNY Fixed Assets Inv Excl. Rural YTD (DEC) Jan 13 CNY Real GDP YTD (4Q)*** Jan 13 CNY Retail Sales YTD (DEC) Jan 13 NZD REINZ House Sales (DEC) Jan 13 04:30 GBP Producer Price Index Input n.s.a. (DEC) Jan 13 04:30 GBP Producer Price Index Output n.s.a. (DEC) Jan 13 04:30 GBP Producer Price Index Output Core n.s.a. (DEC) Jan 13 05:00 EUR Euro-Zone Trade Balance s.a. (NOV) Jan 13 08:30 USD Trade Balance (NOV) Jan 13 09:55 USD U. of Michigan Confidence (JAN P)*** *** 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 9, 2012 Before: AYI, AUGT, PENX, ZEP During: – After: AA, MG, OCZ, SCHN, SMSC, VOXX, WDFC Tuesday, Jan 10, 2012 Before: – During: – After: RFMI, SNX Wednesday, Jan 11, 2012 Before: LEN, LEDS, SVU During: – After: NDN, DRWI, EXFO, PRXI Thursday, Jan 12, 2012 Before: INFY, SJR During: BKSC After: ESS Friday, Jan 13, 2012 Before: JPM During:
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=
