October 20, 2011

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

DAILY COMMENTARY

Wrestling Match Continues (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 October 19, 2011 (4:25 p.m. ET): Closing Prices: DOW 11,504.62 (-72.43, -0.63%), SandP 500 1,209.88 (-15.50, -1.26%), NASDAQ 2,657.43 (+42.51, +1.63%), Nikkei 225 8,772.54 (+30.63, +0.35), DAX 5,913.53 (+36.128, +0.61%), FTSE 5,450.49 (+40.14, +0.74%) OIL 86.03, GOLD 1,643.20, SILVER 31.125 EURO 1.3752, YEN 76.82, BRITISH POUND 1.5773, U.S. DOLLAR INDEX 77.41

Lack of Leadership as Market Holds Resistance The market hasn’t offered up many surprises so far this week despite the fact that it’s been swinging widely back and forth off highs and lows over the past week after striking strong resistance at the SandP 500’s and Dow Jones Ind. Average’s 100-day and 20-week moving averages. It was early last week that we first began to watch out for this type of action and today marked the ninth straight session in which the Dow has failed to follow-up the directional bias of one day into the close of the next. After striking the upper resistance zone on the daily time frame once again in Tuesday’s session, the market reversed course into Wednesday.

The headlines have swung widely along with the market with the most emphasis upon the European debt crisis, the U.S. employment situation, and now earnings. The housing crisis has actually taken a back seat recently, but makes an appearance once again this week. On Wednesday, a report showed that housing starts rose sharply in September to the fastest pace in 1 1/2 years. Most of the gains, however, were from multi-family homes. Existing home sales data is due out at 10:00 a.m. ET on Thursday. In other economic news on Wednesday, the Labor Department reported a 0.3% increase in U.S. consumer prices last month and a 0.1% increase in the core CPI, which excludes food and energy prices. This marks a 3.9% increase in the past 12 months, which is the largest increase in three years. The morning’s data had very little impact upon price action in the index futures. Morning trade was choppy with the SandP 500 and Dow holding up well until early afternoon. The Nasdaq was weighed down by Apple (AAPL). Shares of Apple (AAPL) were down more then 7% afterhours on Tuesday following its fiscal fourth-quarter earnings. The company surprised the market by missing expectations even though the iPhone and iPad maker’s earnings and revenue were up strongly from last year. Despite the disappointment, it offered a better-than-expected outlook for this quarter. Earnings excluding items rose to $7.05 a share, while revenue increased 39% to $28.3 billion. Momentum shifted in the market as the day wore on, finally giving way to selling pressure shortly after 13:00 ET. This pressure increased following the release of the Fed’s Beige Book.

INDEX WRAP-UP

The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a loss of 72.43 points, or 0.63%, and closed at 11,504.62. Only five of the Dow’s thirty index components posted a gain. The top performers were Travelers (TRV) (+5.69%) and Intel (INTC) (+3.59%). Both were higher following earnings. The weakest were Alcoa (AA) (-3.65%), Bank of America (BAC) (-3.61%), and Johnson and Johnson (JNJ) (-2.76%). The SandP 500 ($SPX) finished the session with a loss of 15.50 points, or 1.26%, and closed at 1,209.8. The top percentage performers in the index were Intuitive Surgical Inc. (ISRG) (+9.11%), Apollo Group (APOL) (+7.87%), and Travelers (TRV) (+5.69%). The only industry group in the SandP 500 to advance were the utilities (0.1%). The weakest industry groups were materials (-3.0%), financials (-1.7%), and consumer discretionary (-1.5%). The weakest individual percentage performers were Comerica Inc. (CMA) (-10.52%), Western Digital (WDC) (-9.28%), First Solar (FSLR) (-8.66%), and Cliffs Natural Resources (CLF) (-7.04%). The Nasdaq Composite ($COMPX) ended the session lower by 53.39 points, or 2.01%, on Wednesday and it closed at 2,604.04. The strongest performers in the Nasdaq-100 ($NDX) were Intuitive Surgical Inc. (ISRG) (+9.11%), Apollo Group (APOL) (+7.87%), and Intel (INTC) (+3.59%). The weakest were Green Mountain Coffee Roasters (GMCR) (-14.99%), First Solar (FSLR) (-8.66%), Marvell Technology Group (MRVL) (-5.91%), and Apple (AAPL) (-5.59%). Nasdaq Composite (Figure 3) NOTICE: I will be traveling Thursday evening to attend the World MoneyShow in Chicago where I will be presenting. As a result, this will be my final column this week and it will resume on Monday. I hope to see some of you there! Otherwise, catch the LIVE WEBCAST!!!

ECONOMIC REPORTS AND EVENTS THIS WEEK

U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Oct 19 7:00 AM MBA Mortgage Index 10/15 Oct 19 8:30 AM CPI Sep Oct 19 8:30 AM Core CPI Sep Oct 19 8:30 AM Housing Starts Sep Oct 19 8:30 AM Building Permits Sep Oct 19 10:30 AM Crude Inventories 10/15 Oct 19 2:00 PM Fed’s Beige Book Oct Oct 20 8:30 AM Initial Claims 10/15 Oct 20 8:30 AM Continuing Claims 10/08 Oct 20 10:00 AM Existing Home Sales Sep Oct 20 10:00 AM Philadelphia Fed Oct Oct 20 10:00 AM Leading Indicators Sep International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Oct 19 00:30 JPY All Industry Activity Index (AUG) Oct 19 04:30 GBP Bank of England Minutes*** Oct 19 08:30 CAD Leading Indicators (SEP) Oct 19 08:30 USD Consumer Price Index (SEP)*** Oct 19 08:30 USD Consumer Price Index Ex Food and Energy (SEP)*** Oct 19 08:30 USD Housing Starts (SEP) Oct 19 08:30 USD Consumer Price Index Core Index s.a. (SEP) Oct 19 08:30 USD Building Permits (SEP) Oct 19 14:00 USD Fed Releases Beige Book Economic Survey Oct 20 01:00 JPY Leading Index (AUG F) Oct 20 02:00 EUR German Producer Prices (SEP)*** Oct 20 02:00 CHF Trade Balance (SEP) Oct 20 04:30 GBP Retail Sales (SEP) Oct 20 04:30 GBP Retail Sales w/Auto Fuel (SEP) Oct 20 05:00 CHF ZEW Survey (Expectations) (OCT) Oct 20 10:00 EUR Euro-Zone Consumer Confidence (OCT A) Oct 20 10:00 USD Leading Indicators (SEP) Oct 20 10:00 USD Philadelphia Fed. (OCT) Oct 20 10:00 USD Existing Home Sales (SEP) Oct 20 22:00 NZD Credit Card Spending s.a. (SEP) Oct 21 03:00 CHF Real Estate Index Family Homes (3Q) Oct 21 04:00 EUR German IFO – Business Climate (OCT) Oct 21 04:00 EUR German IFO – Current Assessment (OCT) Oct 21 04:00 EUR German IFO – Expectations (OCT) Oct 21 04:30 GBP Public Finances (PSNCR) (SEP) Oct 21 04:30 GBP PSNB ex Interventions (SEP) Oct 21 04:30 GBP Public Sector Net Borrowing (SEP) Oct 21 05:00 EUR Euro-Zone Government Debt-GDP Ratio (2010)*** Oct 21 07:00 CAD Consumer Price Index (SEP)*** Oct 21 07:00 CAD Bank Canada Consumer Price Index Core (SEP)*** Oct 21 07:00 CAD Consumer Price Index (SEP) *** 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, Oct 17, 2011 Before: SCHW, C, FHN, GCI, HAL, HAS, WFC During: PHG After: BMI, ELS, ICUI, IBM, LNCR, MFI, PCBK, PKG, PRK, SWK, STLD, TESS, VMW, WDFC, WAL Tuesday, Oct 18, 2011 Before: ASRV, BAC, CHKP, KO, DPZ, EMC, FRX, GPC, GS, HOG, JAKK, JNJ, LBAI, MBWM, EDU, PH, PTI, PII, STT, UNF, UNH, GWW During: – After: AAPL, CREE, CCK, CSX, FLXS, FSII, FULT, HA, INFN, INTC, ISRG, JNPR, KED, LLTC, MANH, MRTN, PNFP, PTP, RNST, RLI, SONC, URI, WCN, WERN, YHOO Wednesday, Oct 19, 2011 Before: ABT, MO, APH, AMR, ATMI, BK, BLK, CMA, CTBI, DRH, FCFS, IPT, KCG, KNL, LUFK, MHH, MEG, MS, NGNM, NYB, NTRS, PJC, PNC, BPOP, ROC, SYBT, STJ, SCL, SVU, TXT, TRV, USB, UTX, VCBI, WNS During: ANCX, WABC After: EGHT, AXP, AMLN, AF, BANR, BWLD, CATY, CVCY, CAKE, CRUS, COHU, CLB, CVA, CBST, CVBF, DTLK, ETFC, EWBC, EBAY, EW, EXPO, FNB, FNF, FWRD, FSL, GLF, HNI, KMP, KMR, LRCX, LHO, MKSI, MCRI, NFX, NE, PLCM, RJF, RVBD, SLM, SCSS, SPTN, SYK, SWFT, TCBI, TSCO, WSTL, WDC, WHG, XLNX, ZHNE Thursday, Oct 20, 2011 Before: ALK, ALXN, ADS, ACO, T, AN, BLX, BAX, BBT, BX, BSX, BGG, CSH, CBE, CY, CYS, DHR, DO, LLY, ECA, FITB, FNFG, FRC, FLIR, GMT, GNTX, HAFC, HOMB, HBAN, IEX, IR, IIIN, ESI, JNS, KNSY, KEY, LH, LSTR, LTM, MNRO, MYE, NYT, NBL, NOK, NUE, PENN, PM, POOL, PPG, SASR, SJR, SFNC, SNA, SON, LUV, TCB, ERIC, TNB, UTEK, UMPQ, UNP, USAK, USG, UTMD, WFSL, WSO, WCC During: ALNC, FMFC After: SRCE, ACTG, APKT, ALTR, APOL, ASBC, ATHN, TBBK, BAS, BJRI, BLDR, CALX, COF, CPHD, CMG, CB, CYN, CPWR, CYMI, CYT, EGP, EFII, FFIN, FLEX, GDI, HITT, INDB, INFA, IBKR, LSCC, MXIM, MBFI, MSFT, NTCT, OCFC, PBCT, PXLW, PFBC, PGI, RMTR, RRR, SNDK, SCHN, SBCF, STX, STLY, SYNA, TCO, TPX, WSCI Friday, Oct 21, 2011 Before: AOS, APD, GE, HAR, HON, IDXX, KSU, KCI, MAN, MNI, MUSA, PDS, PRSP, SLB, SXT, STI, UBNK, VZ During: – After: MCBI 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=