September 26, 2011 HOME EDUCATIONAL PRODUCTS CONTACT TONI
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Commentary Hope on the Horizon??? (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 September 23, 2011 (10:00 pm ET): Closing Prices: DOW 10,771.48 (+37.65, +0.35%),SandP 500 1,136.43 (+6.87, +0.61%), NASDAQ 2,483.23 (+27,56, +1.12%), Nikkei 225 8,560.26 (-180.90, -2.07), DAX 5,166.56 (+32.35, +0.63%), FTSE 5,066.81 (+25.20, 0.05%) OIL 79.85, GOLD 1,639.80, SILVER 360.101 EURO 1.3496, YEN 76.58, BRITISH POUND 1.5466, U.S. DOLLAR INDEX 79.23
Commodity Collapse Continues This past week was a rough one for the markets, but particularly for precious metals. The indices were on unsteady feet as the week began, teetering at daily resistance with the latest FOMC meeting on the near horizon. It was the Fed’s announcement on Wednesday afternoon that finally tipped the scale.
The precious metals, however, were already moving lower for the month and had only paused as the market rallied the previous week. When the Fed stated that it continued to foresee significant economic weakness and concerns regarding the larger global economy, the selloff escalated. Even China’s economy has shown signs of contraction, while Greece has inched even closer to defaulting on its debt. Silver took one of the greatest beatings, losing about a quarter of its value over just a couple of days.
Meanwhile, gold shed about 9% for the week. There is no rapid recovery likely on the horizon, although the selling pressure should begin to abate this week. The U.S. dollar has once again become somewhat of a safe haven as investors make the move to cash. It hit a seven-month high this past week. Dow Jones Industrial Average (Figure 1) A Hot Mess On Friday the market took a breather from Wednesday and Thursday’s plunge, but the Dow Jones Ind. Average ($DJI) still ended the week lower by 6.4%, which was the largest one week loss since October, 2008 (although that week was substantially worse with a loss of over 18%). The pace of the week’s selloff was the strongest following the Fed and slowed on Thursday, but the magnitude did not diminish.
The selling pressure had resumed late Wednesday evening in the index futures and remained steady throughout most of Thursday after pausing following Wednesday’s close. It only let up in the final thirty minutes of trade on Thursday, but the pace of the reprieve slowed afterhours and set the stage for another sharp decline into early Friday morning. This created a type of double bottom known as a 2B whereby the second low on the 15 minute time frame slightly breeched Thursday’s low to create bear trap. This helped the market recover into Friday afternoon and trim the week’s losses, but it wasn’t enough to elicit any strong sighs of relief and Friday’s session was mixed.
SandP 500 (Figure 2) Index Results The Dow Jones Industrial Average ($DJI) ended the day on Friday with a gain of 37.65 points, or 0.35%, and closed at 10,771.48. After the extreme losses experienced earlier in the week, nearly two-thirds of the Dow managed to post a gain on Friday as market participants repositioned themselves ahead of the weekend. The top performers were Bank of America (BAC) (+4.13%), Intel (INTC) (+2.55%), Home Depot (HD) (+2.03%), and Cisco Systems (CSCO) (+1.83%). The weakest were DuPont (DD) (-2.86%) and Hewlett Packard (HPQ) (-2.11%). The Dow’s outcome for the week as a whole was a loss of 6.41%. The SandP 500 ($SPX) gain of 6.87 points, or 0.61%, and closed at 1,136.43. The top percentage performers in the index were Hospira Inc. (HSP) (+8.62%), Gannett Inc. (GCI) (+6.32%), Sprint Nextel Corp. (S) (+5.65%), and Stanley Black and Decker (SWK) (+5.65%). The weakest performers were Range Res. Corp. (RRC) (-11.45%), Cabot Oil and Gas (COG) (-5.58%), EQT Corp. (EQT) (-4.09%), and EOG Res. Inc. (ROG) (-3.95%). The SandP 500 ended the week lower by 6.54%. The Nasdaq Composite ($COMPX) ended the session lower by 27.56 points, or 1.12%, on Friday and it closed at 2,483.23. The top gainers in the Nasdaq-100 ($NDX) were CTrip.com Intl. (CTRP) (+6.42%), Yahoo (YHOO) (+5.15%), First Solar (FSLR) (+5.07%), and Marvell Tech. (MRVL) (+5.01%). The weakest were Express Scripts (ESRX) (-1.98%), Illumina Inc. (ILMN) (-1.81%), and Mattel Inc. (MAT) (-1.80%).
The Nasdaq Composite ($COMPX) fell 5.3% for the week. Nasdaq Composite (Figure 3) MONDAY’S OUTLOOK Although Friday’s action was not the most favorable, it does offer some hope for short-term bulls. The 2B that trapped bears early Friday morning is also a pattern that tends to help stabilize market selloffs. In some cases it can lead to a rapid recovery, whereas in others the typical recourse is a gradual trading channel with a slight upside path that is usually followed by another round of selling once the channel breaks. The second low on the 15 minute charts at the end of the week took place with a momentum move that was stronger than Thursday’s selloff. This favors the more gradual corrective scenario as opposed to a rapid recovery, but it can still mean rapid intraday sprints on the upside that can be very favorable to daytraders. It is not, however, typically a strong price development for swingtraders who look to capitalize on multi-day trend moves since a slower and wider trading channel generally means wider stops with less reward potential.
ECONOMIC REPORTS AND EVENTS THIS WEEK
U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto) Sep 26 10:00 AM New Home Sales Aug Sep 27 9:00 AM Case-Shiller 20-city Index Jul Sep 27 10:00 AM Consumer Confidence Sep Sep 28 7:00 AM MBA Mortgage Index 09/24 Sep 28 8:30 AM Durable Orders Aug Sep 28 8:30 AM Durable Ordes ex Transportation Aug Sep 28 10:30 AM Crude Inventories 09/24 Sep 29 8:30 AM Initial Claims 09/24 Sep 29 8:30 AM Continuing Claims 09/17 Sep 29 8:30 AM GDP – Third Estimate Q2 Sep 29 8:30 AM GDP Deflator – Third Estimate Q2 Sep 29 10:00 AM Pending Home Sales Jul Sep 30 8:30 AM Personal Income Aug Sep 30 8:30 AM Personal Spending Aug Sep 30 8:30 AM PCE Prices – Core Aug Sep 30 9:45 AM Chicago PMI Sep Sep 30 9:55 AM Michigan Sentiment – Final Sep International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Sep 25 17:45 NZD Trade Balance (AUG) Sep 25 18:45 NZD Balance (YTD) (AUG) Sep 26 04:00 EUR German IFO – Business Climate (SEP) Sep 26 04:00 EUR German IFO – Current Assessment (SEP) Sep 26 04:00 EUR German IFO – Expectations (SEP) Sep 26 08:30 USD Chicago Fed Nat Activity Index (AUG) Sep 26 10:00 USD New Home Sales (AUG) Sep 26 22:00 CNY Industrial Profits YTD (AUG) Sep 27 EUR German Retail Sales (AUG) Sep 27 GBP Nationwide House Prices n.s.a. (SEP) Sep 27 02:00 CHF UBS Consumption Indicator (AUG) Sep 27 05:30 CHF KOF Institute September Economic Forecast Sep 27 06:00 GBP CBI Reported Sales (SEP) Sep 27 10:00 USD Consumer Confidence (SEP)*** Sep 27 21:00 AUD HIA New Home Sales (AUG) Sep 28 EUR German Import Price Index (AUG)*** Sep 28 02:00 EUR German GfK Consumer Confidence Survey (OCT) (OCT) Sep 28 08:30 USD Durable Goods Orders (AUG)*** Sep 28 08:30 USD Durables Ex Transportation (AUG) Sep 28 19:50 JPY Retail Trade (AUG) Sep 28 19:50 JPY Large Retailers’ Sales (AUG) Sep 29 EUR German Consumer Price Index (SEP P)*** Sep 29 JPY Nomura/JMMA Manufacturing Purchasing Manager Index (SEP) Sep 29 04:30 GBP Net Consumer Credit (AUG) Sep 29 04:30 GBP Net Lending Sec. on Dwellings (AUG) Sep 29 04:30 GBP Mortgage Approvals (AUG) Sep 29 05:00 EUR Euro-Zone Business Climate Indicator (SEP) Sep 29 05:00 EUR Euro-Zone Consumer Confidence (SEP F) Sep 29 05:00 EUR Euro-Zone Economic Confidence (SEP) Sep 29 05:00 EUR Euro-Zone Industrial Confidence (SEP) Sep 29 05:00 EUR Euro-Zone Services Confidence (SEP) Sep 29 08:30 USD Gross Domestic Product (Annualized) (2Q T)*** Sep 29 08:30 USD Personal Consumption (2Q T)*** Sep 29 08:30 USD Gross Domestic Product Price Index (2Q T)*** Sep 29 08:30 USD Core Personal Consumption Expenditure (2Q T) Sep 29 10:00 USD Pending Home Sales (AUG) Sep 29 17:45 NZD Building Permits (AUG) Sep 29 19:01 GBP GfK Consumer Confidence Survey (SEP) Sep 29 19:30 JPY Household Spending (AUG) Sep 29 19:30 JPY Jobless Rate (AUG) Sep 29 19:30 JPY National Consumer Price Index (AUG) Sep 29 19:30 JPY National Consumer Price Index Ex-Fresh Food (AUG) Sep 29 19:30 JPY National Consumer Price Index Ex Food, Energy (AUG) Sep 29 19:50 JPY Industrial Production (AUG P) Sep 29 21:00 NZD NBNZ Activity Outlook (SEP) Sep 29 21:00 NZD NBNZ Business Confidence (SEP) Sep 29 21:30 AUD Private Sector Credit (AUG) Sep 30 01:00 JPY Annualized Housing Starts (AUG) Sep 30 01:00 JPY Housing Starts (AUG) Sep 30 05:00 EUR Euro-Zone Consumer Price Index Estimate (SEP) Sep 30 05:00 EUR Euro-Zone Unemployment Rate (AUG) Sep 30 05:30 CHF KOF Swiss Leading Indicator (SEP) Sep 30 08:30 USD Personal Income (AUG) Sep 30 08:30 CAD Gross Domestic Product (JUL) (JUL)*** Sep 30 08:30 USD Personal Spending (AUG) Sep 30 08:30 CAD Gross Domestic Product (JUL)*** Sep 30 08:30 USD Personal Consumption Expenditure Core (AUG) Sep 30 09:55 USD U. of Michigan Confidence (SEP F)*** Sep 30 21:00 CNY PMI Manufacturing (SEP)*** *** Highly influentialNotice: 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 ANNOUNCMENTS THIS WEEK Monday, Sep 26, 2011 Before: – During: TPI After: – Tuesday, Sep 27, 2011 Before: AM, NEOG, PKE, WAG During: – After: ACN, CMTL, PAYX, PRGS, SABA, SMSC, SNX Wednesday, Sep 28, 2011 Before: ATU, DRI, MKC, NEWL During: – After: MOS, OMN, TXI, WOR Thursday, Sep 29, 2011 Before: – During: – After: CAMP, MU Friday, Sep 30, 2011 Before: – 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. © 1998-2011 All information presented is property of TradingFromMainStreet.com and Bastiat Group, Inc.
