January 31, 2011

An online version of this newsletter is available at http://www.tonihansen.com/Newsletters/current.html.

DAILY COMMENTARY

Housing Prices Slide (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.)

MONDAY’S MARKET WRAP-UP

Market Snapshot for January 30, 2011 (4:47 p.m. ET): Closing Prices: DOW 12,653.72 (-6.74, -0.05%), SandP 500 1,313.01 (-3.32, -0.25%), NASDAQ 2,811.94 (-4.61 -0.16%), Nikkei 225 8,793.05 (-48.17, -0.54%), DAX 6,444.45 (-67.53, -1.04%), FTSE 5,671.09 (-62.36, -1.09%) OIL 98.96, GOLD 1,729.20, SILVER 33.45 EURO 1.3141, YEN 76.33, BRITISH POUND 1.5708, U.S. DOLLAR INDEX 79.225

Dow Jones Inds. and SandP 500 Hit 20-Day SMA The Dow Jones Ind. Average ($DJI) and SandP 500 ($SPX) pulled back to their 20-day moving average zones for the first time in approximately six weeks on Monday. Friday’s weakness was followed by a second round of selling heading into Monday morning after weakness overseas led to a strong downside gap into the opening bell. The gap alone nearly brought the indices to this support level and the fact that both indices had closed in the zone of their 10-day moving averages left the market experiencing wider-than-average opening losses to begin the session. The market overall has a tendency to want to close larger-than-average gaps except in circumstances where the gap itself triggers a daily or weekly setup, such as a trading range breakdown. Since the momentum of the selling between Friday’s highs and Monday’s open, however, was not stronger-than-average, the break in the 10-day moving average alone was not enough to trigger a larger daily sell signal as opposed to merely a smaller 15-time time frame correction within the context of the larger trend.

The market found support early on in Monday’s session, making only slightly lower lows out of the opening bell. These lows established a stronger test of the 20-day moving averages in the Dow and SandP and brought the Nasdaq-100 into support of its own at its 10-day moving average. This was the second time this year that the Nasdaq has struck that support level. As the strongest of the three major indices, it had the easiest time recovering the weekend losses and closed its gap zone by noon. A minor pullback mid-day created a continuation pattern that was followed by further buying into Monday afternoon. This took the Nasdaq back to Friday’s highs and brought the Dow and SandP 500 to its 5 minute and 15 minute 200 period moving averages. They held this resistance level into the close, but remained bullish afterhours and made up more of its losses prior to Tuesday’s opening bell. The “V” reversal that took place off Monday’s lows in the indices keeps the daily uptrend in play, but it will make last week’s highs a strong resistance level for both the Dow and SandP 500.

INDEX WRAP-UP

The Dow Jones Industrial Average ($DJI) ended the day on Monday with a loss of 6.74 points, or 0.05%, and closed at 12,653.72. Twelve of the Dow’s thirty index components posted a gain. The top performers were Microsoft (MSFT) (+1.30%), Verizon (VZ) (+1.07%), and IBM (IBM) (+1.07%). The top percentage losers were Bank of America (BAC) (-3.02%), Procter and Gamble (PG) (-1.70%), and American Express (AXP) (-1.46%). The SandP 500 ($SPX) finished the session with a loss of 3.32 points, or 0.25%, and closed at 1,313.01. Out of the index’s ten industry groups, only telecoms (+0.6%) and technology (+0.3%) posted gains. The weakest sector was the financials (-1.0%). The top individual percentage performers in the index were Nabors Industries (NBR) (+3.51%), Interpublic Group (IPG) (+2.45%), and Monsanto Co. (MON) (+2.19%). The top decliners were Gannett Inc. (GCI) (-6.90%), Staples Inc. (SPLS) (-4.87%), and CBRE Group (CBG) (-4.25%). The Nasdaq Composite ($COMPX) ended the session lower by 4.61 points, or 0.16%, on Monday and it closed at 2,811.94. The strongest performers in the Nasdaq-100 ($NDX) on Friday were Verisign (VRSN) (+2.18%), Micron Technology (MU) (+1.75%), and Nuance Communications (NUAN) (+1.65%). The weakest were CTrip.com Intl. (CTRP) (-5.68%), Staples Inc. (SPLS) (-4.87%), and First Solar (FSLR) (-3.82%).

Housing Data Disappoints The morning’s big data ahead of the open was the Standard and Poor’s/Case-Schiller home-price index at 9:00 a.m. ET. The market has been looking for further evidence of incoming stability and a bottom in the housing crash, but Tuesday’s data did not help bolster those hopes. U.S. home prices fell in nearly all of the cities tracked by the index. This marks the third straight monthly loss. Out of the 20 cities in the index, only Washington and Detroit posted year-over-year increases. The market did not react to the news. Later this morning, watch for the Chicago PMI, followed by January’s consumer confidence report.

ECONOMIC REPORTS AND EVENTS THIS WEEK

U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Jan 30 8:30 AM Personal Income Dec Jan 30 8:30 AM Personal Spending Dec Jan 30 8:30 AM PCE Prices – Core Dec Jan 31 8:30 AM Employment Cost Index Q4 Jan 31 9:00 AM Case-Shiller 20-city Index Nov Jan 31 9:45 AM Chicago PMI Jan Jan 31 10:00 AM Consumer Confidence Jan Feb 1 7:00 AM MBA Mortgage Index 01/28 Feb 1 8:15 AM ADP Employment Change Jan Feb 1 10:00 AM ISM Index Jan Feb 1 10:00 AM Construction Spending Dec Feb 1 10:30 AM Crude Inventories 01/28 Feb 1 2:00 PM Auto Sales Jan Feb 1 2:00 PM Truck Sales Jan Feb 2 7:30 AM Challenger Job Cuts Jan Feb 2 8:30 AM Initial Claims 01/28 Feb 2 8:30 AM Continuing Claims 01/21 Feb 2 8:30 AM Productivity-Prel Q4 Feb 2 8:30 AM Unit Labor Costs Q4 Feb 3 8:30 AM Nonfarm Payrolls Jan Feb 3 8:30 AM Nonfarm Private Payrolls Jan Feb 3 8:30 AM Unemployment Rate Jan Feb 3 8:30 AM Hourly Earnings Jan Feb 3 8:30 AM Average Workweek Jan Feb 3 10:00 AM Factory Orders Dec Feb 3 10:00 AM ISM Services Jan International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Jan 30 05:00 EUR Euro-Zone Business Climate Indicator (JAN) Jan 30 05:00 EUR Euro-Zone Consumer Confidence (JAN F) Jan 30 08:30 USD Personal Income (DEC) Jan 30 08:30 USD Personal Spending (DEC) Jan 30 08:30 USD Personal Consumption Expenditure Core (DEC)*** Jan 30 18:15 JPY Nomura/JMMA Manufacturing Purchasing Manager Index (JAN) Jan 30 18:30 JPY Household Spending (DEC) Jan 30 18:30 JPY Jobless Rate (DEC) Jan 30 18:50 JPY Industrial Production (DEC P) Jan 30 19:01 GBP GfK Consumer Confidence Survey (JAN) Jan 30 19:30 AUD NAB Business Confidence (DEC) Jan 30 19:30 AUD Private Sector Credit (DEC) Jan 31 EUR German Consumer Price Index (JAN P)*** Jan 31 00:00 JPY Annualized Housing Starts (DEC) Jan 31 00:00 JPY Housing Starts (DEC) Jan 31 EUR German Retail Sales (DEC) Jan 31 02:00 CHF UBS Consumption Indicator (DEC) Jan 31 03:55 EUR German Unemployment Change (JAN)*** Jan 31 03:55 EUR German Unemployment Rate s.a. (JAN) Jan 31 04:30 GBP Net Consumer Credit (DEC) Jan 31 04:30 GBP Net Lending Sec. on Dwellings (DEC) Jan 31 04:30 GBP Mortgage Approvals (DEC) Jan 31 05:00 EUR Euro-Zone Unemployment Rate (DEC) Jan 31 08:30 CAD Gross Domestic Product (NOV)*** Jan 31 10:00 USD Consumer Confidence (JAN) Jan 31 17:30 AUD AiG Performance of Manufacturing Index (JAN) Jan 31 19:00 AUD HIA New Home Sales (DEC) Jan 31 19:30 AUD House Price Index (4Q) Jan 31 20:00 CNY PMI Manufacturing (JAN)*** Jan 31 20:30 JPY Labor Cash Earnings (DEC) Feb 01 02:00 GBP Nationwide House Prices n.s.a. (JAN) Feb 01 03:15 CHF Retail Sales (Real) (DEC) Feb 01 03:30 CHF SVME-Purchasing Managers Index (JAN) Feb 01 03:55 EUR German Purchasing Manager Index Manufacturing (JAN F) Feb 01 04:00 EUR Euro-Zone Purchasing Manager Index Manufacturing (JAN F) Feb 01 04:30 GBP Purchasing Manager Index Manufacturing (JAN) Feb 01 05:00 EUR Euro-Zone Consumer Price Index Estimate (JAN) Feb 01 08:15 USD ADP Employment Change (JAN) Feb 01 10:00 USD Construction Spending (DEC) Feb 01 10:00 USD ISM Manufacturing (JAN)*** Feb 01 10:00 USD ISM Prices Paid (JAN) Feb 01 19:30 AUD Trade Balance (DEC) Feb 02 02:00 CHF Trade Balance (DEC) Feb 02 04:30 GBP Purchasing Manager Index Construction (JAN) Feb 02 05:00 EUR Euro-Zone Producer Price Index (DEC)*** Feb 02 10:00 USD Fed’s Bernanke Testifies Before House Budget Committee*** Feb 02 17:30 AUD AiG Performance of Service Index (JAN) Feb 02 20:00 CNY China Non-manufacturing PMI (JAN) Feb 03 USD ICSC Chain Store Sales (JAN) Feb 03 CNY Industrial Profits YTD (DEC) Feb 03 02:00 CHF UBS Real Estate Bubble Index (4Q) Feb 03 03:55 EUR German Purchasing Manager Index Services (JAN F) Feb 03 04:00 EUR Euro-Zone Purchasing Manager Index Composite (JAN F) Feb 03 04:00 EUR Euro-Zone Purchasing Manager Index Services (JAN F) Feb 03 04:30 GBP Purchasing Manager Index Services (JAN) Feb 03 05:00 EUR Euro-Zone Retail Sales (DEC)*** Feb 03 07:00 CAD Unemployment Rate (JAN)*** Feb 03 07:00 CAD Net Change in Employment (JAN)*** Feb 03 07:00 CAD Full Time Employment Change (JAN) Feb 03 07:00 CAD Part Time Employment Change (JAN) Feb 03 07:00 CAD Participation Rate (JAN) Feb 03 08:30 USD Change in Non-farm Payrolls (JAN)*** Feb 03 08:30 USD Change in Private Payrolls (JAN) Feb 03 08:30 USD Change in Manufacturing Payrolls (JAN) Feb 03 08:30 USD Unemployment Rate (JAN)*** Feb 03 08:30 USD Avg Hourly Earning All Employees (JAN) Feb 03 08:30 USD Avg Weekly Hours All Employees (JAN) Feb 03 08:30 Underemployment Rate (U6) (JAN) Feb 03 10:00 USD ISM Non-Manufacturing Composite (JAN) Feb 03 10:00 USD Factory Orders (DEC) *** 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 30, 2012 Before: ARW, CAJ, CFFN, CHFC, GCI, HAE, PHG, KYO, ONB, SIFY, TNB, WEN, WWW During: PEBK After: BIRT, AEIS, ALGN, ARRY, BMTC, EEQ, EEP, FFCH, FIBK, GGG, HTLF, HOLX, ICUI, IDTI, KRC, MCK, MSPD, NAVR, OLN, OFG, PRXL, PXLW, PCL, RGA, RCII, RTEC, SLG, SOA, SCMF, SFG, TGI Tuesday, Jan 31, 2012 Before: AXE, ADM, ARMH, AVY, BIIB, CPLP, CE, CEVA, CIT, CNH, DHR, LLY, ETR, XOM, FHCO, GKSR, GNTX, HRS, HHS, HW, HP, HMC, ITW, KLIC, LLL, LXK, MKTAY, HZO, MAT, MHP, OSK, PCAR, PNR, PFE, PCH, RTIX, SAIA, TECH, TLAB, TYC, UPS, X, VLO, WDR During: EOC, ENI After: ACE, AFL, AFOP, AMZN, AMCC, AJG, AZPN, BHLB, BBOX, BXP, BRCM, CHRW, BCR, CYT, DLB, EXAR, FFIC, FTNT, GLAD, GFF, HLIT, HA, ILMN, IVAC, INYS, JKHY, JDAS, JLL, KTCC, KEYN, LFL, MANH, MTW, MPW, MTH, MSL, MWA, MTGN, NATI, PSEM, PLT, QGEN, RSYS, STX, SLGN, STLY, UBNT, UIS, VRTU, WBSN, WRB Wednesday, Feb 1, 2012 Before: AET, ASCA, AOL, ATMI, AUDC, ALV, BEAV, BOKF, BBNK, GIB, CVLT, COCO, DSPG, ENR, ENTG, EPD, BEN, HFWA, HSY, HVB, IACI, ITG, KFFG, LQDT, MAN, MDCI, MGAM, NDAQ, NI, NOC, OIIM, PGC, RDWR, ST, SU, TMO, TUP, VHS, WHR During: CCNE, MRO After: ADEP, ABCO, ALGT, ALL, DOX, AFG, AMP, AIZ, ATW, AVB, AVNW, BYI, SAN, BMC, CELL, CBT, CACI, CDNS, CRME, CVCY, CMG, COHU, CNQR, CLB, CMRE, CVTI, CCK, EA, EXXI, EQR, EXPO, FBHS, FXCB, GAIN, GMCR, GTAT, HAIN, HWKN, HI, ININ, ISH, ISIL, JDSU, JBSS, KMPR, LVS, MX, MDU, MEAS, MERU, MKSI, NQ, NWK, NEU, OTEX, OPWV, QCOM, QNST, RLD, REG, RBNF, SWM, SHOR, SFLY, SYA, TSO, TTEK, TSCO, TRH, VASC Thursday, Feb 2, 2012 Before: ACM, AGN, ADS, ATK, AZN, BWINB, BZH, BHE, BX, BSX, CAM, CAH, CSL, CI, CME, CMI, DB, DO, DHX, DOW, EXP, RDEN, EVR, GR, IBCP, IP, IVC, K, KELYA, KEM, KNSY, LSTR, LEA, LII, MDC, MA, MMS, MD, MRK, MTOR, MSCI, NOV, NCI, NTWK, NYT, NUS, ODFL, PTEN, PENN, PHM, RSTI, ROP, RCL, RGLD, R, SBH, SLE, SNA, SNE, SE, HOT, SPH, SXC, SYNL, TE, TEN, BCO, TDW, TRCR, VIAB, WBC, WEC, XEL During: BOFI After: APKT, BEBE, BKH, BRS, CLMS, CPT, CATM, CFN, CVCO, CAVM, COLM, CNW, CTCT, BAP, CYMI, DRIV, EW, EXTR, FISV, FLXS, GNW, GIGA, GILD, HPOL, IKAN, INFN, IN, IRF, ITI, XXIA, KEX, BOOT, MCHP, MAA, MTX, MTSC, MFLX, NFG, N, NSR, EGOV, NVLS, OCLS, OPLK, OESX, PCCC, PKI, POWI, PWER, PFG, RDK, SIGI, SIMG, SIMO, SSD, SMT, SPAN, SRCL, TTWO, TSYS, EDE, THQI, TRMB, USLM, UTI, VR, VRTX, WSTG, WHG, ZIGO Friday, Feb 3, 2012 Before: AXL, BEAM, BAH, CLX, UFS, RDY, EL, HNT, HRG, KBALB, MAC, MOD, MGI, OB, PC, SPG, SIRO, SEP, SPB, TSN, WY

During: – After: CBNJ, WGL 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.

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