January 30, 2011 HOME EDUCATIONAL PRODUCTS CONTACT TONI An online version of this newsletter is available at http://www.tonihansen.com/Newsletters/current.html.
DAILY COMMENTARY
Market Struggles to Hold January’s Gains (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.)
FRIDAY’S MARKET WRAP-UP
Market Snapshot for January 29, 2011 (6:00 p.m. ET): Closing Prices: DOW 12,660.46 (-74.17, -0.58%), SandP 500 1,316.33 (-2.10, -0.16%), NASDAQ 2,816.55 (+11.27, +0.4%), Nikkei 225 8,841.22 (-, -%), DAX 6,511.98 (-27.87, -0.43%), FTSE 5,733.45 (-61.75, -1.07%) OIL 99.56, GOLD 1,732.20, SILVER 33.79 EURO 1.3213, YEN 76.69, BRITISH POUND 1.5722, U.S. DOLLAR INDEX 78.98
Market Rally Falters January has been an interesting month for the markets. Both the SandP 500 ($SPX) and Nasdaq-100 ($NDX) have been trading above their 10-day moving averages since late December. While there haven’t been any exceptionally strong single-day moves this month, the indices made steady gains since the December 19th lows on the daily time frame. Another correction attempt began on Thursday when premarket buying gave way to a momentum reversal and a strong day of steady selling from 10:00 a.m. ET and onward. Although the market attempted to recover afterhours, the indices created short patterns Friday morning as a result of the slower comparable momentum on the upside following the European open versus Thursday’s downside. This change in momentum meant that the Friday morning rally was wave two in a two-wave continuation short setup in the index futures. It confirmed by pulling lower off 6:00 a.m. ET highs, hugging the 15 minute 20-period moving average support, and then breaking that support with an Avalanche (TM) short on the 15 minute time frame soon after 8:00 a.m. ET.
Although the selling continued into Friday morning in the indices, the session was a choppy one. By this point the indices were hugging 5 minute 20 sma resistance following a stronger premarket selloff. This was similar to the momentum shift that began with the stronger selling on the 15 minute time frame off Thursday’s highs. The futures were having trouble making new lows intraday and experienced a high degree of price retracement from one bar to the next on the 15 minute time frame as the indices hugged 5 and 15 minute 20 sma resistance. This type of action tends to favor a break in the resistance, but it wasn’t until afternoon that the pace of selling versus buying in mid-day trade began to reverse course.
The 13:00 ET correction period is a very powerful time of the day for market reversals to begin, particularly when they correspond to strong support or resistance levels. Unlike the momentum shifts we saw throughout the course of the daily rally, the recovery attempt on Friday afternoon was very meager. Upside momentum remained gradual compared to earlier swings and the futures market turned lower once again when trading resumed on Sunday evening. Many traders prefer to stay out of the markets over the weekend and late-day position covering is common. However, the higher the market heads without breaking the 10-day moving averages, the closer we get to that scenario playing and it’s a good time to start scouting for weakness on daily charts.
INDEX WRAP-UP
The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 74.17 points, or 0.58%, and closed at 12,660.46. Only two of the Dow’s thirty index components posted a gain. They were Alcoa (AA) (+0.68%) and United Technologies (UTX) (+0.27%). The top percentage losers were Chevron (CVX) (-2.47%), Cisco Systems (CSCO) (-1.36%), and Travelers (TRV) (-1.11%).
Chevron weighed heavily on the Dow after reporting earnings that fell short of expectations. The Dow ended the week lower by 0.47%. It is up 3.63% year-to-date. The SandP 500 ($SPX) finished the session with a loss of 2.10 points, or 0.16%, and closed at 1,316.33. The top individual percentage performers in the index on Friday were First Solar (FSLR) (+11.24%), Newell Rubbermaid (NWL) (+7.97%), and Eastman Chemical (EMN) (+6.98%). The top decliners were Robert Half Intl. (RHI) (-6.75%), Federated Invs. Inc. (FII) (-5.93%), and Devry (DV) (-5.37%). The SandP 500 ended the week higher by 0.07% and is up 4.67% year-to-date. The Nasdaq Composite ($COMPX) ended the session higher by 11.27 points, or 0.4%, on Friday and it closed at 2,816.55. It ended the week higher by 1.07% and is higher by 8.11% year-to-date. The strongest performers in the Nasdaq-100 ($NDX) on Friday were First Solar (FSLR) (+11.24%), Netflix (NFLX) (+6.71%), and Green Mountain Coffee Roasters (GMCR) (+6.40%). The weakest were Sirius XM Radio (SIRI) (-1.92%), Express Scripts (ESRX) (-1.76%), and Micron Tech. (MU) (-1.59%).
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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