October 6, 2011 HOME EDUCATIONAL PRODUCTS
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Daily Commentary
Recovery Efforts Continue (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 5, 2011 (8:45 p.m. ET): Closing Prices: DOW 10,939.95 (+131.24, +1.21%), SandP 500 1,144.03 (+20.08, +1.79%), NASDAQ 2,460.51 (+55.69, +2.32%), Nikkei 225 8,530.63 (+147.65, +1.76), DAX 5,473.90 (+256.32, +4.91%), FTSE 5,102.17 (+157.73, +3.19%) OIL 79.58, GOLD 1,638.50, SILVER 30.35 EURO 1.334, YEN 76.74, BRITISH POUND 1.5468, U.S. DOLLAR INDEX 79.425 Market Rallies 4% Off Lows The market continued its recovery efforts in Wednesday’s session after breaking to new yearly lows earlier the previous day. This flush came after a week of selling that ended with a shift in the momentum of that selling on Tuesday morning and a strong afternoon rally into Tuesday’s closing bell. When the market turns so quickly, however, it tends to have a difficult time sustaining that momentum and this is what we’ve seen in the index futures since then. The futures congested afterhours on Tuesday evening and continued their range-bound trade into the early morning on Wednesday. A break higher came shortly after 6:00 a.m. ET, before the latest economic data hit the wires in the U.S. Although the original attempt to push higher had similar momentum as the prior afternoon, it was unable to sustain the pace and pulled back gradually into the opening bell. This created an upside continuation pattern that triggered out of 10:00 a.m. ET.
Dow Jones Industrial Average (Figure 1)
Jobs Data to Take Center Stage The premarket ADP employment change report had little affect upon price action despite beating most estimates. It showed that private payrolls were up 91,000 last month. Most analysts had expected somewhere between a 45,000-70,000 increase. This marks the first of the employment data for the week, but the most widely anticipated data is due out on Friday with September’s non-farm payrolls and the latest unemployment rate. Analysts are looking for a 90,000 increase in September. The unemployment rate is expected to remain unchanged at 9.1% with very little net gain in the real employment data.
SandP 500 (Figure 2)
Another Triple Digit Gain Materials and energy stocks were among the best performers on Wednesday with respective gains of 4.2% and 3.3%. The market climbed steadily throughout the session with the Dow Jones Industrial Average ($DJI) logging another triple digit gain. The 15 minute 20 period moving average served as a guide for support in the Dow and SandP 500 ($SPX) throughout most of the session. A modest two-wave correction on the five minute time frame took place mid-day coming out of the 11:00 a.m. ET correction period into nearly 13:00 ET. This offered a great opportunity for market participants to catch the afternoon buying with strong intraday setups in numerous issues. The light volume that took place as the market pulled back helped support further afternoon upside. The slower pace of the correction compared to earlier buying was another indication of underlying strength, albeit still modest in comparison to Tuesday afternoon. The session ended just shy of the day’s highs. Nasdaq Composite (Figure 3) INDEX WRAPUP The Dow Jones Industrial Average ($DJI) ended the day on Wednesday with a gain of 131.24 points, or 1.21%, and closed at 10,939.95. Twenty-six of the Dow’s thirty index components posted a gain. The top performers were Disney (DIS) (+5.52%), Cisco Systems (CSCO) (+3.72%), Hewlett Packard (HPQ) (+3.65%), and Chevron (CVX) (+3.48%). The top decliners were McDonalds (MCD) (-0.75%) and Wal-Mart (WMT) (-0.43%). The SandP 500 ($SPX) finished the session with a gain of 20.08 points, or 1.79%, and closed at 1,144.03. The top percentage performers in the index were Tesoro Corp. (TSO) (+13.79%), Alpha Natural Resources (ANR) (+12.96%), Yahoo (YHOO) (+10.10%), and Micron Tech. (MU) (+9.51%). The top percentage decliners for the day were Sears Holdings (SHLD) (-3.21%), Bank of New York (BK) (-2.87%), and Yum Brands (YUM) (-2.67%). The Nasdaq Composite ($COMPX) ended the session higher by 55.69 points, or 2.32%, on Wednesday and it closed at 2,460.51. The strongest performers in the Nasdaq-100 ($NDX) were Research In Motion (RIMM) (+12.38%), Yahoo (YHOO) (+10.10%), and Micron Tech. (MU) (+9.51%). The top percentage decliners were Sears Holdings (SHLD) (-3.21%), Costco (COST) (-1.71%), and Qiagen (QGEN) (-1.43%). OUTLOOK Following Wednesday’s closing bell the market once again fell into a trading range afterhours. The index futures congested into the early morning hours on Thursday before offering a third push to the upside on the 15 minute time frame. The initial trigger came out of 2:00 a.m. ET, but continued around 3:30 a.m. Although Wednesday morning’s breakout was slower than Tuesday’s rally, the push higher into Thursday morning was even more gradual. This change in momentum will make continued upside more difficult ahead of Friday’s employment data. We are not likely to experience as strong of a trend day on Thursday, but the 20-day moving averages are also helping serve as resistance following this rally and it’s common to see at least intraday reactions to that technical level. The European Central Bank held its rates meeting on Thursday. Recent speculation suggested that the bank could cut rates once again, but sentiment had once again shifted in favor of them holding steady and both the Bank of England and the European Central Bank left their rates unchanged at 0.50% and 1.50%, respectively. The Bank of England, however, announced a 75 billion pound increase in its asset purchase plan, bringing its total to 275 billion. In other news, Apple (AAPL) shares were lower in premarket trade following the death of founder Steve Jobs. The news of his passing after a long battle with pancreatic cancer hit the wire early Wednesday evening.
ECONOMIC REPORTS AND EVENTS THIS WEEK
U.S. Domestic: Eastern Time Zone (GMT -5:00) (New York, Toronto)
Oct 5 7:00 AM MBA Mortgage Index 10/01
Oct 5 7:30 AM Challenger Job Cuts Sep Oct 5 8:15 AM ADP Employment Change Sep
Oct 5 10:00 AM ISM Services Sep Oct 5 10:30 AM Crude Inventories 10/01
Oct 6 8:30 AM Initial Claims 10/01 Oct 6 8:30 AM Continuing Claims 09/24
Oct 7 8:30 AM Nonfarm Payrolls Sep Oct 7 8:30 AM Nonfarm Private Payrolls Sep
Oct 7 8:30 AM Unemployment Rate Sep Oct 7 8:30 AM Hourly Earnings Sep
Oct 7 8:30 AM Average Workweek Sep Oct 7 10:00 AM Wholesale Inventories Aug
Oct 7 3:00 PM Consumer Credit Aug International: Eastern Time Zone (GMT -4:00) (New York, Toronto)
Oct 5 03:55 EUR German Purchasing Manager Index Services (SEP F) Oct 5 04:00 EUR Euro-Zone Purchasing Manager Index Composite (SEP F)
Oct 5 04:00 EUR Euro-Zone Purchasing Manager Index Services (SEP F)
Oct 5 04:30 GBP Purchasing Manager Index Services (SEP)
Oct 5 04:30 GBP Gross Domestic Product (2Q F)
Oct 5 04:30 GBP Current Account (2Q) Oct 5 04:30 GBP Total Business Investment (2Q F)
Oct 5 05:00 EUR Euro-Zone Retail Sales (AUG)
Oct 5 08:15 USD ADP Employment Change (SEP)
Oct 5 10:00 USD ISM Non-Manufacturing Composite (SEP)
Oct 6 03:15 CHF Consumer Price Index (SEP)
Oct 6 03:15 CHF CPI – EU Harmonised (SEP)
Oct 6 06:00 EUR German Factory Orders s.a. (AUG)
Oct 6 07:00 GBP BOE Asset Purchase Target (OCT)
Oct 6 07:00 GBP Bank of England Rate Decision (OCT 6)
Oct 6 07:45 EUR European Central Bank Rate Decision (OCT 6
Oct 6 10:00 CAD Ivey Purchasing Managers Index s.a. (SEP)
Oct 6 18:30 AUD AiG Performance of Construction Index (SEP)
Oct 7 USD ICSC Chain Store Sales (SEP)
Oct 7 JPY Bank of Japan Rate Decision (OCT 7)
Oct 7 01:00 JPY Leading Index (AUG P)
Oct 7 01:45 CHF Unemployment Rate s.a. (SEP)
Oct 7 04:30 GBP Producer Price Index Output n.s.a. (SEP)
Oct 7 04:30 GBP Producer Price Index Output Core n.s.a. (SEP)
Oct 7 06:00 EUR German Industrial Production s.a. (AUG)
Oct 7 07:00 CAD Unemployment Rate (SEP)
Oct 7 07:00 CAD Net Change in Employment (SEP)
Oct 7 07:00 CAD Full Time Employment Change (SEP)
Oct 7 07:00 CAD Part Time Employment Change (SEP)
Oct 7 07:00 CAD Participation Rate (SEP)
Oct 7 08:30 USD Change in Non-farm Payrolls (SEP)
Oct 7 08:30 USD Change in Private Payrolls (SEP)
Oct 7 08:30 USD Change in Manufacturing Payrolls (SEP)
Oct 7 08:30 USD Unemployment Rate (SEP)
Oct 7 08:30 Average Hourly Earning (SEP)
Oct 7 15:00 USD Consumer Credit (AUG)
*** 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 ANNOUNCEMENTS THIS WEEK Tuesday, Oct 4, 2011 Before: – During: – After: GPN, LNDC, RECN, YUM Wednesday, Oct 5, 2011 Before: AYI During: – After: ESIC, NAUH, OCZ Thursday, Oct 6, 2011 Before: RBN During: – After: DRWI, IDT Friday, Oct 7, 2011 Before: – During: – 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. © 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.co/z/r/?LEwsrOzMtCxMnBwcTCzstEa0jIwMjAyMzJw=
