December 5, 2011

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

(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 December 4, 2011 (10:00 p.m. ET): Closing Prices: DOW 12,019.42 (-0.61, -0.0%), SandP 500 1,244.28 (-0.30, -0.02%), NASDAQ 2,626.93 (+0.73, +0.03%), Nikkei 225 8,680.78 (+37.03, +0.43%), DAX 6,080.68 (+44.80, +0.74%), FTSE 5,552.29 (+62.95, +1.15%) OIL 101.33, GOLD 1,751.10, SILVER 32.81 EURO 1.3411, YEN 77.95, BRITISH POUND 1.5608, U.S. DOLLAR INDEX 78.65

Market Overcomes Holiday Hump, but Faces New Challenges in the Week Ahead The market performed quite a feat over the past several weeks. October began with a strong recovery after August’s free-fall, but a lack-luster start to November was hit with strong selling in the second-half of the month as the Thanksgiving holiday approached. Not even Thursday’s feasting and insane black-Friday door busters were enough to substantially perk the market’s mood prior to the weekend. But as the new week began last week, it brought with it some renewed hope. After a rare six-day decline in which the Dow Jones Industrial Average ($DJI) remained under its 15 minute, 20-period moving average, the market turned sharply higher. The buyers began to test the waters in Friday’s shortened session, but got cold feet in the afternoon. On Monday, however, the market was able to hold strong gap higher that broke the index futures out of their downtrend channel. Breakaway gaps such as this are prime candidates leading into multi-day trend moves and boy did the market move! By the end of the week all the major indices were up over 7% and the Russell 2000 jumped a whopping 10.%.

European News Once Again Leads Despite a strong start, it was Wednesday’s session that really took the markets higher. This was largely attributed once again to Europe’s influence. We’ve continued to hear chatter on how European leaders are intending to deal with their sovereign debt crisis, but the market has wanted fewer words and more action. On Wednesday we saw some of that talk come to fruition when the Fed, the European Central Bank, and four other leading central banks lowered the pricing on U.S. dollar swaps by 50 basis points, making it cheaper to borrow the dollar. The market jumped on the news in one of the strongest single-day moves of the year. This single-session move left the indices extended as the week wound down, but the bulls continued to hold fast. The indices were left dealing with strong price resistance from early last month, as well as 200-day moving average resistance in the SandP 500. This put a brakes on the buying, but a Momentum Reversal into the weekend left the index futures sitting pretty heading into the new week.

Friday’s Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 0.61 points, or 0%, and closed at 12,019.42. Thirteen of the Dow’s thirty index components posted a gain. The top performers were the financials: JP Morgan (JPM) (+6.14%) and Bank of America (BAC) (+1.99%). It was followed by Disney (DIS) (+1.72%) and Home Depot (HD) (+1.53%). The weakest performers were Hewlett-Packard (HPQ) (-1.91%), Johnson and Johnson (JNJ) (-1.52%), and Travelers (TRV) (-1.45%). The index ended the week higher by 7.01%. The SandP 500 ($SPX) finished the session with a loss of 0.30 points, or 0.02%, and closed at 1,244.28. The strongest individual percentage performers in the index were Western Digital (WDC) (+7.49%), Morgan Stanley (MS) (+6.96%), and JP Morgan (JPM) (+6.14%). Western Digital’s gains came after the hard-disk maker restarted production at one of its facilities in Thailand ahead of schedule following flooding damages. The weakest were Tenet Healthcare Corp. (THC) (-10.68%), Big Lots (BIG) (-8.68%), and St Jude Med. (STJ) (-7.01%). The SandP 500 ended the week higher by 7.39% with all ten of its industry groups posting gains. The Nasdaq Composite ($COMPX) ended the session higher by 0.73 points, or 0.03%, on Friday and it closed at 2,626.93. The top index components in the Nasdaq-100 ($NDX) were Green Mountain Coffee Roaster (GMCR) (+4.45%), Comcast (CMCSA) (+3.50%), and Apollo (APOL) (+2.09%). The weakest performer was Research In Motion (RIMM) (-9.74%), which fell after lowering its full-year earnings forecast. Seagate Technology (STX) (-7.07%), and Flir Sys. (FLIR) (-3.41%). The Nasdaq Composite ($COMPX) ended the week higher by 7.59%.

OUTLOOK

Getting Technical The index futures opened higher on Sunday evening and continued to push higher into early Monday morning. The bulls have continued to hang on into early trade on Monday, but unlike last Monday, in which the gap signaled a renewal of strength on a breakout, today’s gap to the upside follows strength from last week and gives the bulls another hurdle to overcome. Since the rally of this past week is comparable to the week before, creating a “V” type of pattern on the daily time frame, pushing through last month’s highs will be quite difficult without the market first taking more time to catch its breath. A couple of top morning gainers to keep an eye on for continued upside this morning include Metlife (MET) and Citrix Systems (CTXS). By mid-day, however, expect to see more companies begin to struggle for further gains. Earnings season is now behind us, but the market still has a number of outlets to turn to for market-moving news. This week will include relatively few major U.S. economic reports other than this morning’s ISM services data and factory orders, but a series of meetings in Europe will still keep us busy. These will include rate meetings from the Bank of England and the European Central Bank, which is expected to cut its rates by 0.25% on Thursday. For those that were still curious about this morning’s relatively overlooked ISM Services Index for November and October’s factory orders, the ISM index came in at 52.0, while factory orders fell 0.4%.

ECONOMIC REPORTS AND EVENTS THIS WEEK

Dec 5 10:00 AM Factory Orders Oct Dec 5 10:00 AM ISM Services Nov Dec 7 7:00 AM MBA Mortgage Index 12/03 Dec 7 10:30 AM Crude Inventories 12/03 Dec 7 3:00 PM Consumer Credit Oct Dec 8 8:30 AM Initial Claims 12/03 Dec 8 8:30 AM Continuing Claims 11/26 Dec 8 10:00 AM Wholesale Inventories Oct Dec 9 8:30 AM Trade Balance Oct Dec 9 9:55 AM Mich Sentiment Dec International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Dec 4 17:30 AUD AiG Performance of Service Index (NOV) Dec 4 18:30 AUD TD Securities Inflation (NOV) Dec 5 03:55 EUR German Purchasing Manager Index Services (NOV F) Dec 5 04:00 EUR Euro-Zone Purchasing Manager Index Composite (NOV F) Dec 5 04:00 EUR Euro-Zone Purchasing Manager Index Services (NOV F) Dec 5 04:30 EUR Euro-Zone Sentix Investor Confidence (DEC) Dec 5 04:30 GBP Purchasing Manager Index Services (NOV) Dec 5 05:00 EUR Euro-Zone Retail Sales (OCT)*** Dec 5 10:00 USD ISM Non-Manufacturing Composite (NOV) Dec 5 10:00 USD Factory Orders (OCT) Dec 5 19:30 AUD Current Account Balance (3Q) Dec 5 22:30 AUD Reserve Bank of Australia Rate Decision (DEC 6)*** Dec 6 03:15 CHF Consumer Price Index (NOV) Dec 6 03:15 CHF CPI – EU Harmonised (NOV) Dec 6 05:00 EUR Euro-Zone Gross Domestic Product s.a. (3Q P)*** Dec 6 05:00 EUR Euro-Zone Household Consumption (3Q P) Dec 6 05:00 EUR Euro-Zone Gross Fixed Capital (3Q P) Dec 6 06:00 EUR German Factory Orders s.a. (OCT) Dec 6 09:00 CAD Bank of Canada Rate Decision (DEC 6)*** Dec 6 10:00 CAD Ivey Purchasing Managers Index SA (NOV) Dec 6 17:30 AUD AiG Performance of Construction Index (NOV) Dec 6 19:30 AUD Gross Domestic Product (3Q)*** Dec 7 00:00 JPY Leading Index (OCT P) Dec 7 01:45 CHF Unemployment Rate (NOV) Dec 7 03:15 EUR ECB Calls for Bids in 3-Month Dollar Tender Dec 7 04:30 GBP Industrial Production (OCT) Dec 7 04:30 GBP Manufacturing Production (OCT) Dec 7 05:00 EUR ECB Announces Allotment in 3-Month Dollar Tender Dec 7 06:00 EUR German Industrial Production n.s.a. and w.d.a. (OCT) Dec 7 10:00 GBP NIESR Gross Domestic Product Estimate (NOV)*** Dec 7 15:00 USD Consumer Credit (OCT) Dec 7 15:00 NZD Reserve Bank of New Zealand Rate Decision (DEC 8)*** Dec 7 16:45 NZD Manufacturing Activity (3Q) Dec 7 18:50 JPY Trade Balance – BOP Basis (OCT) Dec 7 18:50 JPY Machine Orders (OCT) Dec 7 19:30 AUD Part Time Employment Change (NOV) Dec 7 19:30 AUD Full Time Employment Change (NOV) Dec 7 19:30 AUD Employment Change (NOV)*** Dec 7 19:30 AUD Unemployment Rate (NOV)*** Dec 7 23:30 JPY Bankruptcies (NOV) Dec 8 JPY Eco Watchers Survey: Current (NOV) Dec 8 JPY Eco Watchers Survey: Outlook (NOV) Dec 8 07:00 GBP BOE Asset Purchase Target (DEC)*** Dec 8 07:00 GBP Bank of England Rate Decision (DEC 8)*** Dec 8 07:45 EUR European Central Bank Rate Decision (DEC 8)*** Dec 8 08:15 CAD Housing Starts (NOV) Dec 8 10:30 CAD Bank of Canada Publishes Financial System Review*** Dec 8 16:45 NZD NZ Card Spending – Retail (NOV) Dec 8 16:45 NZD NZ Card Spending (NOV) Dec 8 18:50 JPY BSI Large All Industry (4Q) Dec 8 18:50 JPY BSI Large Manufacturing (4Q) Dec 8 18:50 JPY Nominal Gross Domestic Product (3Q F)*** Dec 8 18:50 JPY Gross Domestic Product Annualized (3Q F)*** Dec 8 18:50 JPY Gross Domestic Product (3Q F)*** Dec 8 21:00 CNY Producer Price Index (NOV)*** Dec 9 CNY Industrial Production (NOV) Dec 9 CNY Fixed Assets Inv Excl. Rural YTD (NOV) Dec 9 CNY Retail Sales YTD (NOV) Dec 9 EUR ECB Publishes Dec. Monthly Report*** Dec 9 02:00 EUR German Consumer Price Index (NOV F)*** Dec 9 02:00 EUR German Consumer Price Index – EU Harmonised (NOV F)*** Dec 9 02:00 EUR German Trade Balance (OCT) Dec 9 04:30 GBP Producer Price Index Input n.s.a. (NOV) Dec 9 04:30 GBP Producer Price Index Output n.s.a. (NOV) Dec 9 04:30 GBP Producer Price Index Output Core n.s.a. (NOV) Dec 9 04:30 GBP Visible Trade Balance (OCT) Dec 9 08:30 USD Trade Balance (OCT) Dec 9 09:55 USD U. of Michigan Confidence (DEC 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, Dec 5, 2011 Before: DG, IMKTA, TSTF During: – After: LRAD, MLNK, PBY Tuesday, Dec 6, 2011 Before: AZO, BMO, LDR, LQDT, TOL, TTC During: HOFT After: MW, MIND, NCS, REXI, SAI, TIER, VRA, VTSS Wednesday, Dec 7, 2011 Before: CBAK, MTN During: – After: CHKE, GIII, GEF, INTL, PSUN, PLAB Thursday, Dec 8, 2011 Before: CIEN, CONN, COST, IEC, LAYN, MPR, SFD, TITN During: – After: ALOG, COO, DAEG, FLOW, GBDC, HRB, ODC, PLL, SEAC, SWHC Friday, Dec 9, 2011 Before: FGP, KMGB, OYOG During: – After: – 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=