December 28, 2011
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DAILY COMMENTARY
HAPPY HOLIDAYS!
(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.) TUESDAY’S MARKET WRAP-UP Market Snapshot for December 27, 2011 (6:31 p.m. ET, Dec. 27): Closing Prices: DOW 12,291.35 (-2.65, -0.02%), SandP 500 1,265.43 (+0.10, +0.01%), NASDAQ 2,625.20 (+6.56, +0.25%), Nikkei 225 8,440.56 (-, -%), DAX 5,889.76 (+10.83, +0.18%), FTSE 5,512.70 (+55.73, +1.02%) OIL 101.31, GOLD 1,592.90, SILVER 28.695 EURO 1.3067, YEN 77.88, BRITISH POUND 1.5662, U.S. DOLLAR INDEX 80.135 Markets Continue to Grapple for Yearly Gains The market didn’t offer a lot of action on Tuesday as many participants continued to enjoy an extension of the end of the year holiday season. The markets pulled slightly higher early on in the day, but retreated into the close with further selling afterhours. A two-wave pullback into early Wednesday morning off Tuesday’s highs allowed the index futures to once again pull higher ahead of Wednesday’s opening bell, but overall price action has been rather uneventful.
Tuesday’s Index Wrap-up The Dow Jones Industrial Average ($DJI) ended the day on Tuesday with a loss of 2.65 points, or 0.02%, and closed at 12,291.35. Sixteen of the Dow’s thirty index components ended the session in the black. The strongest were Intel (INTC) (+0.66%), Cisco Systems (CSCO) (+0.65%), and ATandT (T) (+0.57%). The weakest were Bank of America (BAC) (-2.14%), JP Morgan Chase (JPM) (-1.61%), and General Electric (GE) (-1.21%). The SandP 500 ($SPX) finished the session with a gain of 0.10 points, or 0.01%, and closed at 1,265.43. The strongest individual percentage performers in the index were Mead Johnson Nutrition (MJN) (+5.80%), International Game Technology (IGT) (+4.95%), and Tiffany and Co. (TIF) (+3.48%). The weakest was Sears Holdings Corp. (SHLD) (-27.20%). Other top decliners were Computer Sciences Corp (CSC) (-8.99%), which looks to have further downside over the next week, and Whirlpool Corp. (WHR) (-8.93%). The Nasdaq Composite ($COMPX) ended the session higher by 6.56 points, or 0.25%, on Tuesday and it closed at 2,625.20. The top index components in the Nasdaq-100 ($NDX) were Research In Motion (RIMM) (+6.90%), Alexion Pharmaceuticals (ALXN) (+3.58%), and Wynn Resorts (WYNN) (+3.21%). The weakest were Sears Holdings Corp. (SHLD) (-27.20%), First Solar (FSLR) (-5.07%), and Netflix (NFLX) (-2.78%).
Oil in Play On a day of light holiday trade oil excelled. Rising over 2% to pass the $100/barrel mark, the gains came primarily in response to threats from Iran to cut off the flow of oil through the Strait of Hormuz. The threat followed the tightening of Western sanctions against the country. Oil had already risen sharply off the year’s lows from early October, but had fallen into a trading range after striking price resistance mid-November. Since then it has been trading in a range along those highs. Over the past week it has moved from the lower end of that range to the upper end, so even though part of Tuesday’s push was based on political rumblings, it was also a technical continuation of a pattern already in play. Now it will once again have to contend with the upper end of this range. Granted, the range itself has a bias favoring a bullish breakout, but it’s a little too early to likely see a strong breakout without stalling once more beforehand. Oil (Figure 4) Market Outlook This week is a light one for economic data, but a few things to still keep an eye out for will be the National Realtors’ pending-home-sales report on Thursday and the Chicago Purchasing Managers Index report for December on Friday. The market is still dealing with price resistance from prior highs from this year as it tries to close out the year without a loss. Volume will remain light into the New Year, but this light volume can also amplify intraday swings in markets that do catch the spotlight. This is what we saw on Tuesday in oil. Overall, however, continue to expect light trade. The resistance, coupled with last week’s rally, has resulted in slightly higher highs on the 15 minute time frame in the indices. This is creating a Momentum Reversal Short pattern on that time frame heading into Wednesday’s session, so buyers beware! Even though investors will not wish to see a negative close for the year, the market will face a struggle to avoid at least an intraday pullback.
ECONOMIC REPORTS AND EVENTS THIS WEEK
Dec 27 9:00 AM Case-Shiller 20-city Index Oct Dec 27 10:00 AM Consumer Confidence Dec Dec 28 7:00 AM MBA Mortgage Index 12/24 Dec 29 8:30 AM Initial Claims 12/24 Dec 29 8:30 AM Continuing Claims 12/17 Dec 29 10:00 AM Pending Home Sales Nov Dec 29 11:00 AM Crude Inventories 12/24 Dec 30 9:45 AM Chicago PMI Dec International: Eastern Time Zone (GMT -4:00) (New York, Toronto) Dec 26 21:00 CNY Industrial Profits YTD (NOV) Dec 27 JPY Annualized Housing Starts (NOV) Dec 27 JPY Housing Starts (NOV) Dec 27 02:00 CHF UBS Consumption Indicator (NOV) Dec 27 10:00 USD Consumer Confidence (DEC)*** Dec 27 18:30 JPY Household Spending (NOV) Dec 27 18:30 JPY Jobless Rate (NOV) Dec 27 18:30 JPY National Consumer Price Index (NOV) Dec 27 18:30 JPY National Consumer Price Index Ex-Fresh Food (NOV) Dec 27 18:30 JPY National Consumer Price Index Ex Food, Energy (NOV) Dec 27 18:50 JPY Retail Trade (NOV) Dec 27 18:50 JPY Large Retailers’ Sales (NOV) Dec 27 18:50 JPY Industrial Production (NOV P) Dec 28 05:30 CHF KOF Swiss Leading Indicator (DEC) Dec 29 GBP Nationwide House Prices n.s.a. (DEC) Dec 29 10:00 USD Pending Home Sales (NOV) Dec 29 18:15 JPY Nomura/JMMA Manufacturing Purchasing Manager Index (DEC) Dec 29 19:30 AUD Private Sector Credit (NOV) Dec 30 EUR German Consumer Price Index (DEC)*** Dec 30 EUR German Consumer Price Index – EU Harmonised (DEC P)*** Dec 30 04:30 GBP Bank of England Housing Equity Withdrawal (3Q) (3Q) *** 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 26, 2011 Before: – During: – After: – Tuesday, Dec 27, 2011 Before: CALM During: – After: Wednesday, Dec 28, 2011 Before: – During: PNY After: BLIN Thursday, Dec 29, 2011 Before: – During: – After: DMND Friday, Dec 30, 2011 Before: SHIP, MVC, RDI During: EONC, GSI, HAUP After: ARKR, NOBH 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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