Quantitative Easing III Likely on the Way

SUMMARY:

- France spills the beans early on an S&P downgrade and the market takes its licks.
- Stocks sell but once again they recover off the lows with the low to high intraday action. If S&P action occurred a couple of months back we would be talking about Black Friday part 2.
- JPM disappoints but the reaction in the stock and financials is minimally negative.
- Michigan Sentiment posts a nice January bounce.
- Europe has its reasons for backing off its Iranian oil embargo plans. What are our reasons for not taking Canada's oil, producing our own, creating thousands of jobs, giving people incomes to buy homes given low rates, and lowering the price of oil and gasoline?
- Earnings and economic data for the short week ahead, and still we see plenty of upside patterns that we will take advantage of if they show the moves.
- S&P downgrade portend an EU recovery? When S&P downgraded the US our economy rebounded.
- Quantitative Easing III likely on the way: it is an election year, Bernanke knows which side will preserve his job, and his henchmen are laying the groundwork.

A backend loaded news week overcomes some pretty negative news and holds up just fine.

Monday is Martin Luther King Day, so the financial markets will be closed. I was worried about that because there may be something happening in Europe over that long weekend. While we will be closed on Monday, other markets will be open and we might be behind the curve. That could lead to some significant selling on Friday in anticipation that something may happen. As it turns out, this morning our friends the French let slip that S&P would downgrade the credit of seven European nations (one being France) from AAA to AA+. They stole S&P's thunder, but it did not matter. Reuters carried the story and the news was out. As a matter of fact, I am glad France did this.

Futures were somewhat lower because JPM missed in its revenue guidance, and that pull a pall across the market. Financials had been moving up well, and this news knocked them back. But that is okay; it is a normal profit-taking day after a good run higher. This was not carnage for JPM or any of the other financials. It did have futures trading under water, but not desperately so. Then came France spilling the beans about the S&P downgrade. When that news hit, futures really tumbled. When the market opened it continued to fall to the downside, looking for a bottom after this news.

What would have happened a couple of months ago? The Dow would have dropped 300-400 points easily. The Dow was down, but it only fell 160 points on the low. That was no 400 points drop. I have seen 400 points drops, and this was no 400-point drop. Indeed, the Dow reached down and tapped at the 20 day EMA which is coincident with the late-October peak. It tapped it and recovered beautifully off the lows to close down about 50 points. Great action. What was that? I said great intraday action.

This was bad news, but we all knew it was coming. We have been dealing with the PIIGS for over a year now. We all knew there were problems and knew nothing had been done. There has been some deft kicking of the can down the road, but nothing major. Mind you, the ECB did finally get in the game. Mr. Draghi has started to cut rates, and a lot of the pundits have been saying that the ECB helped the EU avoid a catastrophe. Maybe that is the case. Maybe they flooded enough liquidity in there to get things thawed out a bit. We do know that the dollar LIBOR has dropped for the first time in months. It went from below 20 to 58. Now it slid back to 57. I can live with that. There is a little improvement, and things are loosening up in Europe. So, timely as ever, S&P comes in and downgrades. France and Austria were knocked down a notch. The knocked Italy, Spain, and Portugal down two notches. There was an expected downgrade, but there is always a reaction to that harsh reality slap in the face, even if we all knew it was coming. That is what we saw from the market on Friday. Again, even though we have been dealing with this for over a year, it is good to see that the rating companies finally got in and let us all know that there is truly a problem in Europe.

Europe is probably going into a recession. It is likely already there, and it may be an ugly one. But it is taking steps to improve liquidity, and hopefully it will expand their debt enough to float them out, similar to what we have done in the U.S. That may lead to horrible inflation down the road. I do not know for sure. I have a pretty good idea, but the Fed keeps saying it will not happen. So we stick our heads in the sand, believe, and buy stocks. That is apparently what happened on Friday.

Stocks were down, but then after a half hour in the day, Michigan Sentiment came out at 74 versus the 71.2 expected. That helped turn the market back to the upside. Anything over 70 is good. It was 69.9 back in December, and this is the first read from January. That looks solid. Never mind that the trade balance was a bit worse than expected. Export prices fell again. We can live with that, too, I guess. It was the Michigan Sentiment that helped turn the market back to the upside. Indeed, while stocks did not ever recover to positive, they did not do badly. It is more of that low to high action that is the hallmark of this current rally.

Even on days were it is up, it starts low and finishes high. It is able to pull it off. There is more of that bullish bias start the New Year and the "January effect." Funds are looking to put money to work. They always do at this time of year in order to get the big percentage gains for the smaller stocks. Things in the US are improving, and they want to buy the small stuff, let it appreciate, and then get good gains to start the year. Then they can back off and coast as the year moves ahead. Why? A lot of people are saying this may be a tough year for the economy even after it gets a good start to the end of 2011, as we saw back in 2010. A good finish, but it cannot keep the mo. We will have to see what happens there, and I am still worried about it. I was saying that four and five months ago. I was worried about what would happen after the first of the year.

For now, the market is moving higher. For now, that is a good omen for the economy. The small caps are continuing to move up, and that is always a positive. We do not want to go against the market. That is why, despite our misgivings in our gut about what may happen in 2012, we defer to what the market is showing with many stocks in position to buy. We have been taking advantage of them, and they have been working for us. Not going to complain about that. Sure, there are clinkers out there. They always happen. We are coming into earnings season, we have pre-announcements and warnings, and there are stocks gapping upside and downside. You are in the game, and that will happen. But we have a lot of great positions. We never put everything in one position. That is just money management. You spread your trades out, you make no trade bigger than a certain percentage of your portfolio. You manage your money, in other words, and you will make money.

In any event, we are seeing this low to high action, which is positive for the market. That is a positive for this rally continuing. Even in the face of some very negative news out of Europe, this market was able to recover off of its low. The Dow was down 160 points, coming up over 100 points off of its low to close. Buyers using dips to move in. As a result, the indices cut their losses significantly.

SP500, -0.5%; NASDAQ, -0.5%; Dow, -0.4%; SP600, -0.9%; SOX, -2.1%

Not a great day, but not the carnage that could have been. Again, you have to look at the low to high action, still showing a bullish or upside bias to the market even on a negative day.


OTHER MARKETS

You can see a response to the European news in the other markets.

Dollar. 1.2676 versus 1.2825 euro. The DXY0 looks like the dollar was down, but it was not down against the euro. These are lows of the euro versus the dollar we have not seen since 2010. Against the other currencies, the dollar was a bit weaker, so the DXY0 overall was lower. The DXYO was higher on Thursday when the dollar was lower against the euro. You see how it works; it is not just the dollar/euro that moves the DXY0. Overall the dollar continues its way higher, testing the late-September/early-October high as it continues to trend up the 20 day EMA. Indeed, it traded below the 20 day EMA intraday and recovered to hold that support level. The dollar continues its strength. We would love to see the dollar strengthen. We are all tired of our dollars being worth less than they were three years ago or even longer than that. Even George W. Bush's presidency pursued a somewhat weak-dollar policy. He just was not so open about it.


Bonds. 1.84% versus 1.97% 10 year U.S. Treasury. Bonds had a rip-roaring day. Big moves. Bonds bouncing back to the upside. It was a bit of a fear trade with the downgrades from several EU countries. Some money fled to the U.S. This was a huge move for the 10 year, and it will probably give some of that back as the news is absorbed into the market.


Gold. 1,631.10, -16.60. Gold was down on the day. Gold has been an enigma. It looked as if it wanted to break higher, but it broke lower. It looked like it wanted to break down, and then it broke higher. Now it is holding over the 200 day EMA, indeed, bouncing back up off of that level intraday on Friday. Gold is a jumbled pattern right now. At some point we will get a good buy in gold. We are just waiting for it to show up. This pattern is hard to love right now, but I will note one thing. There was a triangle, a breakdown. Now you have a double bottom at roughly the 78% Fibonacci retracement. In theory, you could get a move back up to the prior high off of this double bottom. That is something to look at, but it is such a jumbled pattern.

It did come back from a lower low that undercut that September low. Whenever you see that false breakdown and a recovery, that is a positive. People used it to step in, and it held right on top of the April to July consolidation. It is a logical point for it to hold again as it did in September. When it undercut it again and did not fail, that showed there were buyers still here. I still think it could roll over at this point. There is resistance where it is right now. A gap higher from early August, the peak in October, and then the lows in November. It has resistance; we just have to see if it falls back down. Then it would have to test this old low again that has proven to be support thus far. If gold continues higher from here, it is probably a trade up to the old high. That is what you shoot for with a double bottom at the lower Fibonacci extensions.


Oil. 98.68, -0.29. Oil had something of a rough week. A rough week in that it was really holding up well thanks to Iran wanting to close the Strait of Hormuz and saying it would do so if there were economic sanctions against it. That ratcheted up the price of oil. It looked like it was ready break above that November peak, and then Europe said they could not impose that oil embargo for another six months. Why? Some EU countries may not be able to replace that oil. Frankly, their economies are in the toilet. If they had to go elsewhere to get oil, it would be more costly. Then Iran said it will close the Strait of Hormuz, and that would raise the price of oil even further. That would put more pressure on the economies, and did I mention they were already in the toilet? That would probably flush the toilet and then we would have a bunch of the PIIGS rooting around in the sewer. It did not want to take any action to exacerbate the problem for its member nations. It said they did not like what Iran is doing. If it gets a nuke, it will be a real problem. But if they go down in the toilet, that is a real problem, too. The old, "I will save myself first and then worry about everyone else later" mentality. We are looking at six months down the road.

That is a long explanation to say that oil fell, but it did not fall out of its pattern. Not at all. It tapped the 50 day EMA on Friday and bounced to a doji. Looks like it wants to bounce right back up.


THE NEWS

TO VIEW THE ECONOMY OVERVIEW CLICK THE FOLLOWING LINK:

Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html

Why are we not creating readily available jobs, lowering oil costs, and putting more money in American pockets?



TECHNICAL SUMMARY

The internals were lackluster, but that is what you would expect.

Volume. -0.5% NASDAQ; +3.8% NYSE. NASDAQ's volume did not increase on the worries out of Europe. Not bad. It did rally on the NYSE, but it also did so as the indices recovered off of their lows. Stocks in general bounced off their lows. That is positive. Buyers step in and drive things back up on higher volume. That is a good indication. When we look at the charts, you will see where they bounced off of. That makes is look even better.

Breadth. -2:1 NASDAQ; -1.9:1 NYSE. Breadth was not that great and not that bad. No major problems, and that goes along with what I talked about earlier with the reaction to the news.


CHARTS

SP500. SP500 just undercut the recent support level, the flat plateau to begin the year, and it rebounded off of that 10 day EMA. It lost the move over the October peak temporarily, but recovered it on a closing basis. Still good action. It reached down, reversed, volume was up. Buyers came in and supported the SP500, and likely those financials were holding it up as well. They still make a difference on the SP500.


NASDAQ. NASDAQ had decent action as well. It sold off, it recovered. It is holding the line, although it is still below the October and November peaks. It is doing what we want and playing along. You could say we have something of an island reversal. It could end up being that. We have a gap higher and a cluster at the top. It could be primed to gap lower; it all depends on earnings. It is earnings season now, and the question is how those big names will drive NASDAQ. The NYSE indices look good. Tech is not in a leadership position as far as its pattern is showing. It is not the time of year for tech to be a leader, so the fact that it is following along is a positive. It would be even more positive if it was leading, but you take what you can get.


DJ30. On the Dow you can see it a bit plainer. It almost touched the 20 day EMA and reversed, and it closed to hold above the 10 day EMA. It, too, saw volume increase as it rebounded and is in the next trading range up to the April and July peaks. Perfect action on the Dow.


SP600. The small caps were down on the day, but they tapped the 10 day EMA and bounced. That was also a tap at the October peaks. It held that level and rebounded, albeit modestly, along with the rest of the indices. It did no harm. It left itself in good shape to continue the move.


SOX. SOX lost 2% on the day. It is very NASDAQ-ish in its pattern. A gap higher, testing back. It could gap lower, and that would be all she wrote. After all, it is at the top of the range. It is walking on thin ice. It is holding above the early-December peak. Maybe that will hold it up. By the way, that is also coincident with the high from September. Maybe that will hold it and bounce it. Note that September looks very similar with the gap higher, the gap lower, and then it sold off. That was an island reversal. Here we have the gap higher and it is sagging. We have to wait and see if the SOX can hang on. Similar to the NASDAQ, it is not an index you would anticipate to lead at this time of the year. But we are seeing several semiconductors stocks performing well and continuing to perform well as others try to step up. It is a totally mixed sector right now, and we will see if they can continue to hold the line.


LEADERSHIP

Financial. The financials were knocked back on JPM's numbers. Next week there is a basket full of earnings. That includes WFC, one of the nice performers in this group. It has not just been the big names, but the regionals such as STT. It was performing quite well. They all got knocked back on Friday, but it was nothing major. We will look for a little more test, and maybe the earnings season in these stocks will give them more of a test. Next week, a lot of these will report, as noted. After that, maybe they could have the impetus to move to the upside.

Technology. AAPL looks like there is a little flag and it wants to break to a new high. GOOG has come back, and we will have to see. It has a more bearish flavor to it, but it could hold the line and make a break to the upside. CERN is trying to hang on and rebound. NTGR is showing a lot of life. It is testing again after a nice break to the upside. Unable to break through the November and December peaks, but it looks like it wants to do it this time, so it will have room to the upside. Tech is not looking great overall, but there are stocks that look really good. We want to take advantage of those.

Drugs/Healthcare. JAZZ surged to the upside, and now it is coming back for a test. BABY had a break to the upside, and now it is coming back to test. We are seeing a lot of this in drugs as well. OFIX was surging higher last week. Once again, many sectors are performing well.

This week I went over how well building materials have been doing. Home builders, engineering firms, materials, and construction are all performing better. That is the "stuff" that helps stronger economies. We did not have these kinds of moves in these kinds of stocks in the other failed attempts for the economy to move higher. In 2010 there were three quarters of 3% and almost 4% gain in GDP that evaporated in the wind. It could not hold because there was not any substance. This time we have some substance going. That is why things could be better in 2012. Maybe it will not fizzle as it did in 2010 and 2011. It remains to be seen. I am still in the Missouri "Show Me" State. You have to show the good moves, but it could do it. It is an election year, and many strange things can happen.


THE MARKET

SENTIMENT INDICATORS

VIX: 20.91; +0.44
VXN: 21.38; +0.59
VXO: 20.13; +0.95

Put/Call Ratio (CBOE): 0.74; -0.11


Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market, then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market does not have the cash to drive it higher.

Bulls: 51.1% versus 49.5%. Back up but hanging around 50%. Over the past three months a steady increase. Still probing the overdone range and could be part of the picture that tops out the current in January, but it is not there yet. 35% is the threshold measuring bullish versus bearish action. Six weeks the bulls were below bears. A powerful sentiment signal but now dissipating. Highs from April and December (60% readings spanning December through early May 2011). The 5 year high is 62.0. The crossover level at 29% bulls from July 2010 is long gone. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 29.8% versus 30.5%. Back and forth around 30% where it has flat-lined for 6 weeks. Bears remain skeptical. Skeptics in the face of a move is a good sign the move continues. Lower but not anywhere near suggesting investors are carefree. The average the past month and more is 30%. The index spent seven weeks over the 35% threshold considered a bullish indicator. For more reference, bearishness hit a 5 year high at 54.4% the last week of October 2008. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment. Prior levels for comparison: Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). That was a huge turn, unlike any seen in recent history.


NASDAQ

Stats: -14.03 points (-0.51%) to close at 2710.67
Volume: 1.656B (-0.54%)

Up Volume: 586.93M (-533.07M)
Down Volume: 1.03B (+517.52M)

A/D and Hi/Lo: Decliners led 2.1 to 1
Previous Session: Advancers led 1.6 to 1

New Highs: 40 (-24)
New Lows: 24 (0)


SP500/NYSE

Stats: -6.41 points (-0.49%) to close at 1289.09
NYSE Volume: 734M (+3.82%)

Up Volume: 853.11M (-1.407B)
Down Volume: 2.74B (+1.08B)

A/D and Hi/Lo: Decliners led 1.87 to 1
Previous Session: Advancers led 1.6 to 1

New Highs: 108 (-7)
New Lows: 24 (+9)


DJ30

Stats: -48.96 points (-0.39%) to close at 12422.06
Volume DJ30: 161M shares Friday versus 128M shares Thursday.


TUESDAY

Next week is a short week, but there is a lot of data. It starts with New York Empire Manufacturing on Tuesday. On Tuesday we also have Industrial Production and Capacity. PPI on Wednesday. On Thursday there are Initial Claims, and we got close to 400K this week. We also have CPI, but it is not expected to do much. Housing Starts, Building Permits, and the Philly Fed are all very important. Existing Home Sales are on Friday.

Some big news, but all of it will pale in comparison to the flood of earnings that come out next week. As noted, there are a lot in financial and lot in tech. You name it, they will be announcing. We have had a lot of pre-announcements and some surprises to the downside. A lot of those, but we have also had some great ones to the upside. We are looking for the market to continue its upside moves to have that upside bias even as the numbers come out.

Remember, often in earnings you get that initial surge in the first couple of weeks of earnings. Everyone thinks the results are great and some big names drive the indices higher. Then investors get the picture, and they realize things are okay but not that great. Then you have the fall off. We have all been there. In July things took off, and then it was not so great. But then the earnings came back late. Investors thought it was pretty good, but it was not enough to hold. In April things were not so great, but then things took off. They were better than they thought.

We are coming in a little hot. We get a couple of weeks of good earnings announcements as we are coming in hot, and then we go down. In July we came in hot and went down. In April we came in hot and went down, but then we were back up. We could get that shakeout in the financial area. We have stocks in position to test, and some are already testing, setting up for new moves.

I think we have a couple more weeks to the upside. Will we take a bunch of new positions? Not really. We have some great ones that are moving. If the market be continues up, we will bank more profit on them just as we did this past week. But we can still take new positions. As a matter of fact, we found a bunch of plays this week and weekend that we can put money to work in. Some of these already have the news out, so we do not really have to worry about them. I always like that. The news is out, they have gapped to the upside, and we are looking maybe for a continuation move off a breakaway gap. Those are always nice.

That is what I like about earnings. Even though we do not always stay in the stocks during earnings season, it sets up new moves either upside or downside. We love playing those breakaway gaps after the news comes out. We may get a gap fill. If you do not, you will have more upside. Or if it goes the other way, you will have more downside. Even in earnings season we get opportunity coming into the numbers and after the numbers.

We will just take what the market gives. Right now there is a synergistic, positive combination of better economic data, earnings that are pretty good, pre-announcements that are worrisome, and then the sense that maybe Europe has it under control. S&P came out with downgrades, but S&P is always late to the party. When S&P comes out, maybe things are better. What happened with the U.S.? S&P downgraded, and then the economic data started to improve. Could Europe now start to improve? It very well could be. With that in mind, we will not turn down opportunity as it presents itself. If a stock is in good position, is not extended, has room to run, and we can take advantage it, then yes, we will. I will not say," Yes we can" because I might throw up if I did. I will say yes, we WILL take advantage of that.

I want to mention that the Fed is making some noise. There was another Fed FOMC member out today talking about the worry the Fed has that the economy will not be able to sustain this move. There are pundits positing that the Fed is thinking about QE3. Why on earth would we need QE3 if the data is improving as it has been? We have data that is improving that was not on the other attempts. Like I said, the materials, the housing, and the home builders stocks are improving. That is something we have not seen before. It makes this look a bit more sustainable. Why would we need QE3 and more inflation pressure? Because it is an election year.

Ben Bernanke is the most political Fed chairman we have ever had. He knows he is gone as soon as any Republican is elected. Rick Perry said something about hanging him in Texas. I do not know what he was talking about. Ron Paul would just get rid of the Fed altogether. You get the picture. He is siding with the guy who will keep him, and it is an election year. The economy has been showing signs of improvement. It probably does not need any more stimulus. We do not need it for the inflation reasons, that is for sure. We may just get QE3 anyway to pump up those financial assets even more. We all realize what happened with QE1 and QE2. There is 1 and 2, and now there is the selloff as we had in 2010. And we are looking for number 3. Perhaps that is why the market has been moving up in anticipation of that. It could be. Do not be surprised if we get QE3. If we do, stocks will take off. Of course we will make a lot of money if that happens. We better make a lot because we will have to worry about inflation. We can make a lot and then buy some gold with the profits.

Do not be surprised if that happens. That is my new thought for 2012. I am not too much into predictions; I am just talking about the possibilities. It sure looks like the Fed is setting it up. All I am doing is reading what is out there I am not predicting. The Fed is setting up QE3 because it is an election year. The Fed wants their guy, the guy in power, to get reelected. At least that is what Ben Bernanke wants. Then he will keep his job and hopefully, in his mind, he will go down as the guy who saved us all from the brink. We will see what happens.

I will see you on Tuesday. Have a great weekend!


Support and Resistance

NASDAQ: Closed at 2710.67

Resistance:
2754 is the recent October 2011 high
2759 is the mid-May low
2762 is the February low
2796 is the February gap down point
2816 is the early April peak.
2825 is the 2007 closing peak.
2841 is the February 2011 peak
2862 is the 2007 peak
2879 is the July 2011 peak
2888 is the May 2011 peak

Support:
2706 to 2705 is the April 2011 low and the February 2011 and consolidation low (bottom of the trading range) 2723 to 2705 is the range of support at the bottom of the January to May trading range
2686 is the January 2011 closing low
2676 is the January 2010 low and the December 2011 peak
The 200 day SMA at 2658
2645-2650ish from December 2010 consolidation
2643 is the September 2011 high
The 50 day EMA at 2620
2612 is the late August 2011 peak
2603 is the March 2011 intraday low (post-Japan low)
2599 is the June 2011 low and NASDAQ
2593 is the November intraday high
2580 is the November 2010 closing high
2572 is the November 2-11 gap down point
2555 is the mid-August 2011 peak
2546 is the early September 2011 gap down point
2535 is the November island reversal gap point
2532 is the early August gap down point
2469 is the November 2010 low
2441 is the November 2011 low
2331 from October 2010 low and the August 2011 intraday low
2305 from the August 2010 peak (summertime base)
2139 is the May and June 2010 low
2123 is the August 2010 gap down point
2100 from the August 2010 lows


S&P 500: Closed at 1289.09
Resistance:
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1313 from the August 2008 interim peak
1318.51 is the May low
1325-27 is the March 2008 closing low and the May 2006 peak.
1332 is the early March peak
1340 is the early April 2011 peak
1344 is the February 2011 peak is being challenged again
1357 is the July 2011 peak
1364 is the March 2007 low
1370 is the August 2007 low
1371 is the recent May 2011 peak

Support:
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
The 200 day SMA at 1258
1258 is June 2011 intraday low
1255 is the late December 2010 consolidation range
1249 is the March 2011 low (post-Japan)
The 50 day EMA at 1248
1235 is the mid-December 2010 consolidation low
1231 is the late August 2011 peak
1227 is the November 2010 peak
1220 is the April 2010 peak
1209 is the mid-August 2011 high
1196 is the November 2010 consolidation peak
1178-1180 is the October 2010/November 2010 consolidation low
1158 is the November 2011 low
1131 - 1127 from August 2010 base peak.
1119 is the early August closing low
1109 is the mid-September 2010 gap up point
1101 is the August 2011 low
1075 is the October 2011 intraday low
1099 from the mid-July interim peak
1090 is the early September 2010 gap up point
1040 from the August 2010 lows and May/June 2010 lows
1011 is the summer 2010 low


Dow: Closed at 12,422.06
Resistance:
12,754 is the July intraday peak
12,876 is the May high
13,058 from the May 2008 peak on that bounce in the selling

Support:
12,391 is the February 2011 peak
12,284 is the October 2011 peak
12,258 is the December 2011 peak
12,110 from the March 2007 closing low
12,094 is the April 2011 low
The 50 day EMA at 12,061
The 200 day SMA at 11,959
The June low at 11,897 (closing)
11,893 from March 2008 closing low
11,867 from the August 2009 high and peak on that bounce in the selling.
11,734 from 11-98 peak
11,717 is the late August 2011 peak
The August low at 11,702
11,555 is the March low
11,452 is the November 2010 peak
11,178 from November 2010
10,978 is the bottom of the November 2010 consolidation
10,750 from September 2010
10,720 is the August closing low
10,705-710 from January 2010 peak
10,694-700 from August 2010 peak
9938 is the August 2010 low


Economic Calendar

January 9 - Monday
Consumer Credit, November (15:00): $20.4B actual versus $7.0B expected, $6.0B prior (revised from $7.6B)

January 10 - Tuesday
Wholesale Inventories, November (10:00): 0.1% actual versus 0.6% expected, 1.2% prior (revised from 1.6%)

January 11 - Wednesday
MBA Mortgage Purchas, 01/07 (7:00): +4.5% actual versus -3.7% prior
Crude Inventories, 01/07 (10:30): 4.958M actual versus 2.209M prior

January 12 - Thursday
Initial Claims, 01/07 (8:30): 399K actual versus 375K expected, 375K prior (revised from 372K)
Continuing Claims, 12/31 (8:30): 3628K actual versus 3600K expected, 3609K prior (revised from 3595K)
Retail Sales, December (8:30): 0.1% actual versus 0.4% expected, 0.4% prior (revised from 0.2%)
Retail Sales ex-auto, December (8:30): -0.2% actual versus 0.3% expected, 0.3% prior (revised from 0.2%)
Business Inventories, November (10:00): 0.3% actual versus 0.5% expected, 0.8% prior
Treasury Budget, December (14:00): -$84.0B expected, -$78.1B prior

January 13 - Friday
Trade Balance, November (8:30): -$47.8B actual versus -$44.0B expected, -$43.3B prior (revised from -$43.5B)
Export Prices ex-ag., December (8:30): -0.2% actual versus -0.2% prior (revised from -0.1%)
Import Prices ex-oil, December (8:30): 0.1% actual versus -0.2% prior
Michigan Sentiment, January (9:55): 74.0 actual versus 71.2 expected, 69.9 prior

January 17 - Tuesday
New York Empire Manufacturing, January (8:30): 10.0 expected, 9.5 prior

January 18 - Wednesday
MBA Mortgage Index, 01/14 (7:00): +4.5% prior
MBA Mortgage Purchase Index, 01/14 (7:00): +4.5% prior
PPI, December (8:30): 0.1% expected, 0.3% prior
Core PPI, December (8:30): 0.1% expected, 0.1% prior
Net Long-Term TIC Fl, November (9:00): $4.8B prior
Industrial Production, December (9:15): 0.5% expected, -0.2% prior
Capacity Utilization, December (9:15): 78.1% expected, 77.8% prior
NAHB Housing Market , January (10:00): 21 expected, 21 prior

January 19 - Thursday
Initial Claims, 01/14 (8:30): 387K expected, 399K prior
Continuing Claims, 01/07 (8:30): 3613K expected, 3628K prior
Core CPI, December (8:30): 0.0% prior
CPI, December (8:30): 0.1% expected, 0.0% prior
Core CPI, December (8:30): 0.1% expected, 0.2% prior
CPI, December (8:30): 0.2% prior
Housing Starts, December (8:30): 670K expected, 685K prior
Building Permits, December (8:30): 680K expected, 681K prior
Philadelphia Fed, January (10:00): 10.0 expected, 10.3 prior
Crude Inventories, 01/14 (11:00): 4.958M prior

January 20 - Friday
Existing Home Sales, December (10:00): 4.57M expected, 4.42M prior

By: Jon Johnson, Editor
Copyright 2012 | All Rights Reserved

Jon Johnson is the Editor of The Daily at InvestmentHouse.com

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