Market Finds No Cliff Recovery Rumor to Save it on Friday

MARKET SUMMARY

We are still in the 'in-between' holiday season, this one even more unique given the Fiscal Cliff issue/problem. We like to give the staff (and myself) a lighter schedule during this time but we also like to make money. Thus we protect what we have and keep an eye out for developing possibilities. Thus the report is a slimmed down version. Thanks!

Friday the market found no Cliff recovery rumor to save it as on Thursday. Thus it didn't recover. Indeed, it did the opposite, diving into the last 25 minutes of trade when reports relating to the White House and Congress meeting failed to resolve a thing.

'Meet the new plan, same as the old plan . . .' (we apologize to The Who).



The irony. A week ago the President said he would propose a scaled down plan to help accomplish a fiscal cliff deal. In today's meeting with leaders of Congress the President proposed . . . nothing. Maybe he just watched The Godfather Part II and wanted to play some Al Pachino: 'My offer is nothing.'



So, apparently the old plan remains the new plan. And as the headlines screamed regarding the meeting, our great leaders left the meeting far apart. The President still wants to put taxes over the economy and the republicans put spending cuts above all. I guess there is a compromise in there somewhere, but what the news stations don't seem to get is that the House has a group of members whose constituents sent them to DC to fight what the democrats AND the typical big government republicans are doing.

The result: the hope faded again, though it took awhile to do it. NASDAQ dumped 25 points from the high. DJ30 dropped over 150 points. As noted, unlike Thursday after hope failed, there was no asinine rumor to send the market back up. Indeed, the story of the afternoon sent stocks, already soft, down hard.

SP500 -15.67, -1.10%
NASDAQ -25.60, -0.86%
DJ30 -158.20, -1.21%
SP400 -0.71%
RUTX -0.61%
SOX -0.71%

OTHER MARKETS
Dollar stronger: 1.3216 versus 1.3248
Bonds up again: 1.70% versus 1.72%
Oil flat: 90.80, -0.07
Gold faded: 1655.90, -7.80

The Economic Data was not bad; on the surface that is. As with Thursday's reports, the headlines were simply put, misleading.

The Chicago PMI is classic: 51.6 versus 50.0 expected, and 50.4 prior.

Looks good, but this report is one where the sum of the sub-indices equals the overall number. What this report shows is that things are worse in the Midwest.

Employment belly flopped to 45.9 from 55.2, the lowest level in the past three years.

Capital Investment fell to a two and one-half year low.

Inventories climbed again: 49.8 versus 47.1

Obamacare and related expenses along with fiscal cliff issues were cited as reasons for a hiring freeze in Q4.

So we saw jobless claims improve though the real numbers increased, pushing weekly claims well over 400K. New home sales supposedly surged to a 5 year high, yet take away the adjustments and a meager 27K homes were sold while inventories jumped. Good times indeed as the reports have modified headlines that try to take the eye off of what is going on in the real world of deficits running $50 to $100T depending upon which forecaster you look to. At those levels, however, does it really matter? We cannot pay for it if we taxed away everything and confiscated everything.

Of course that will happen. Retirement accounts will eventually be 'nationalized' because it will be a matter of national security. Without taking them we won't be able to maintain our military and that would be a threat to our security. Thus take those funds, offer another social security like savings plan (unfunded of course) and destroy wealth and thus any power attached to it. Guns are next. The CT shooting will end up with bans on all kinds of weapons and very importantly, likely high taxes on guns and ammunition. Take the money, take the guns, total domination. That is why we had those elements in the Bill of Rights, i.e. to keep the government smaller and contained. How is that working out?

But . . . I digress.

The market had a bad day. SP500 blasted lower from the 50 day EMA. NASDAQ finished below the lows of the past month. DJ30 plowed under its 200 day SMA as it undercut the Thursday low.

RUTX on the other hand held the 20 day EMA with a doji. The midcaps held decently as well though they did plow under the 20 day EMA; can still put in a higher low, however. They remain the last stand for the stock market as the large cap indices throw in the fiscal cliff towel, at least until the next rumor hits.

This coming week we are actually, believe it or not, going to look at upside plays. Yes the pullback has turned to selling, but most of the damage is on the large cap indices. Even then, not all are suffering and actually look good, e.g. financial stocks. Others look good as well: GOOG, TRIP, APKT, etc.

If there is a cliff deal stocks will bounce. Many of our plays are in great position to bounce if that trigger comes along. Those others also represent upside opportunity and we will take advantage of it if a watered down, do-nothing, accomplish nothing deal is struck with an agreement to agree later on the entitlements and spending cuts.

Gee, wasn't that the idea behind the sequestration in the first place? You know, get together and strike a deal because the sequestration would be just too draconian. Here we go again, and it turns out the drivers of the bus don't know how to drive and are taking us not into the ditch but into the abyss.

So, while the market can bounce on a deal, if it doesn't come we can add to our downside plays and of course protect current upside that held nicely to end the week. They are in good position but need that catalyst.




MARKET STATS

Nasdaq
Stats: -25.6 points (-0.86%) to close at 2960.31
Volume: 1.131B (-14.38%)

Up Volume: 216.26M (-255.84M)
Down Volume: 903.4M (+45.31M)

A/D and Hi/Lo: Decliners led 2.08 to 1
Previous Session: Decliners led 1.37 to 1

New Highs: 24 (-7)
New Lows: 34 (+6)

S&P
Stats: -15.67 points (-1.1%) to close at 1402.43
NYSE Volume: 471M (-8.01%)

A/D and Hi/Lo: Decliners led 2.14 to 1
Previous Session: Decliners led 1.19 to 1

New Highs: 50 (-15)
New Lows: 32 (-12)

Dow/NYSE
Stats: -158.2 points (-1.21%) to close at 12938.11


Support and resistance

NASDAQ: Closed at 2960.31

Resistance:
2962 is the April 2012 low
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2988 is the July 2012 high
The 200 day SMA at 2991
The 50 day EMA at 2998
2999 is the bottom of the August 2012 consolidation
3000 is the February 2012 post-bear market high
3024 is the gap point from early May
The 2011 up trendline at 3037
3042 from 5/2000 low and several other price points
3062 is the December 2012 prior peak
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3104-3112 from August and mid-October peaks.
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low


S&P 500: Closed at 1402.43

Resistance:
1406 is the early May 2012 peak
1408 is the late October 2012 range closing low
The 50 day EMA at 1423
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1433 from August 2007 closing lows
1434 from early November 2012
1440 from November 2007 closing lows
1445 is a short term down TL from the September 2012 peak
1466 is the September 2012 closing peak and rally closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
The 200 day SMA at 1365
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low


Dow: Closed at 13,096.31

Resistance:
The 50 day EMA at 13,110
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,413 from the late September 2012 low
13,557 to 13,662
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,015
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
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
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak


Economic Calendar

December 26 - Wednesday
MBA Mortgage Index, 12/22 (7:00): -12.3% prior
Case-Shiller 20-city, October (9:00): 4.3% actual versus 3.9% expected, 3.0% prior

December 27 - Thursday
Initial Claims, 12/22 (8:30): 350K actual versus 375K expected, 362K prior (revised from 361K)
Continuing Claims, 12/15 (8:30): 3206K actual versus 3200K expected, 3238K prior (revised from 3225K)
New Home Sales, November (10:00): 377K actual versus 379K expected, 361K prior (revised from 368K)
Consumer Confidence, December (10:00): 65.1 actual versus 70.0 expected, 71.5 prior (revised from 73.7)
Natural Gas Inventories, 12/22 (10:30): -82 bcf prior

December 28 - Friday
Chicago PMI, December (9:45): 51.6 actual versus 51.0 expected, 50.4 prior
Pending Home Sales, November (10:00): 1.7% actual versus 1.0% expected, 5.0% prior (revised from 5.2%)
Natural Gas Inventor, 12/22 (10:30): -72 bcf actual versus -82 bcf prior
Crude Inventories, 12/21 (11:00): -0.586M actual versus -0.964M prior


January 2 - Monday
MBA Mortgage Index, 12/29 (7:00): -12.3% prior
ISM Index, December (10:00): 50.5 expected, 49.5 prior
Construction Spending, November (10:00): 0.5% expected, 1.4% prior
Auto Sales, December (14:00): 5.6M prior
Truck Sales, December (14:00): 6.5M prior

January 3 - Tuesday
Challenger Job Cuts, December (7:30): 34.4% prior
ADP Employment Change, December (8:15): 140K expected, 118K prior
Initial Claims, 12/29 (8:30): 365K expected, 350K prior
Continuing Claims 12/22 (8:30): 3200K expected, 3206K prior
Natural Gas Inventories, 12/29 (10:30)

January 4 - Wednesday
Nonfarm Payrolls, December (8:30): 150K expected, 146K prior
Nonfarm Private Payrolls, December (8:30): 145K expected, 147K prior
Unemployment Rate, December (8:30): 7.7% expected, 7.7% prior
Hourly Earnings, December (8:30): 0.2% expected, 0.2% prior
Average Workweek, December (8:30): 34.5 expected, 34.4 prior
Factory Orders, November (10:00): 0.5% expected, 0.8% prior
ISM Services, December (10:00): 53.5 expected, 54.7 prior
Natural Gas Inventor, 12/29 (10:30)
Crude Inventories, 12/29 (11:00)

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

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

If a Deal is Struck, Market has an Open Field

MARKET SUMMARY

- It could have been a lot worse after Plan Boehner fails.
- Small caps, mid-caps act like adults.
- Income and spending solid, Durables Orders solid despite Sandy. Maybe if the world did end on 12/21 December would produce some rip-roaring reports!
- With all our 'leaders' out of town, at least the weekend and through Christmas should be safe.
- Economic data not bad. QE4 in place. If a deal is struck, market has an open field.

Market mourns the demise of Plan Boehner, but it could have been a whole lot worse.


'What a filthy job.' Mel Brooks' 'Young Frankenstein'
'Could be worse.'
'How?'
'Could be raining.'

Thursday Boehner announced Plan B was flushed and the futures went with it. The night did not heal the hurt and futures remained substantially lower pre-market into the open. Boehner came out later and said he and the republicans were still ready, were not giving up, but needed the President and the Senate to come forth with something.

There was much rejoicing.


He is brave Sir Robin, Brave Sir Robin brave is he.
When danger reared its ugly head he quickly turned his tail and fled, brave, brave, brave Sir Robin!
(when they ate Sir Robin's minstrels there was much rejoicing. Yeah.)

Nothing was quickly forthcoming from the other side and so the market was left up to its own devices. There was talk we were going to face another debt ceiling dump or TARP-like tumble. Talk is cheap. You know what? It didn't do bad at all.

The market did sell but after testing the 20 day EMA, SP500 bounced back upside, albeit modestly, holding the 10 day EMA on the close. SP400 was stellar, bouncing off its 10 day EMA. Russell 2000 didn't even make its 10 day EMA before reversing for a modest loss. DJ30 bounced off the 50 day EMA and held decently as well. It was not all candy and nuts, but even NASDAQ bounced to close over its 10 day EMA after gapping to the 200 day SMA.

The market has definitely shown worse days than Friday. Perhaps it was the idea that after all of the posturing, name calling, whining, and frankly doing what their constituents voted for them to do, a deal would still be struck. Well, if that was the case I suppose the market would have surged back upside. Perhaps it was just making the best of it given it is Christmas, and as Hans Grueber said in 'Die Hard,' the markets were simply being of good cheer.


'It's Christmas Theo, the time for miracles so be of good cheer. And get me my detonators!'

Hans' last statement is the one to keep in the back of your mind: the market did okay on Friday, the last full session before Cliffmas, and while it can heal itself from that wound, any further trauma and the sellers might indeed take out their detonators.

As for the good news, however, besides the indices stemming the losses and actually rebounding off the lows, the data was not bad.


Economic data solid even with Sandy: Order more hurricanes along with QE!!

The economic reports were definitely palatable if not quite believable. Durable Goods orders surged on an adjusted basis in a month when Sandy was supposed to devastate orders after devastating the East coast. Didn't happen, at least if you look at the adjustments. If you don't adjust the data the orders skipped the Christmas rush and dove off the Fiscal Cliff already. The real numbers for orders were negative; they were just adjusted up to account for the season and Sandy. Remember: what happens when things are better than expected when adjusted for worse events - - the numbers get hugely distorted.

Hey, here is a thought: maybe we SHOULD have some more hurricanes or other natural disasters to help the economy. I mean our leaders think that food stamps are economic stimulus (the old unemployment creates employment theory of socialist economics). Man, if 12/21/12 had turned out to be the end of the world just think how strong the December numbers would have been!

But it is, after all, Christmas, and we are not going to hold too strong a light to the numbers. Why should we? After all Bernanke and the Fed have the market's, and by extension, Congress' and the President's back:

"If the economy actually went off the fiscal cliff, our assessment, the CBO's assessment, outside forecasters, all think that that would have very significant adverse effects on the economy and on the unemployment rate. And so, on the margin, we would try to do what we could. We would perhaps increase [asset purchases] a bit."
--Ben Bernanke, 12-12-12 press conference post-FOMC decision to implement QE4


In keeping with the Frankenstein theme.

Still, the economic reports were comforting if not totally believable.

Personal Income, November (8:30): 0.6% actual versus 0.3% expected, 0.1% prior (revised from 0.0%)

Personal Spending, November (8:30): 0.4% actual versus 0.3% expected, -0.1% prior (revised from -0.2%)

PCE Prices - Core, November (8:30): 0.0% actual versus 0.1% expected, 0.1% prior

Durable Orders, November (8:30): 0.7% actual versus 0.2% expected, 1.1% prior (revised from 0.5%)
Durable Orders -ex Transports, November (8:30): 1.6% actual versus -0.2% expected, 1.9% prior (revised from 1.8%)

Michigan Sentiment - Final, December (9:55): 72.9 actual versus 74.8 expected, 74.5 prior



OTHER MARKETS

Dollar. 1.3173 versus 1.3238 euro. Even with a ride over the Cliff looking more possible, the dollar rallied. This must be the most convoluted logic on earth: going off the Cliff pushes the US into recession. Republicans show no inclination to deal with the democrats, making a cliff dive more likely as evidenced by the stock market. Yet, because the rest of the world is so weak and co-dependent upon the US that the US dollar becomes a safe haven because the US economy might go into recession and thus impact the rest of the world's economies? Makes my head spin (or is it the wine I am drinking?).

Bonds. 1.75% versus 1.80% 10 year Treasury. Gapped up to the 200 day SMA with a doji. Safe haven trade, so I guess that makes some sense in relation to the dollar, but not really. I can see bonds rising. The dollar? Really?

Gold. 1660.00, +14.10. Rallied right back up to the 200 day SMA after holding at the same low as Thursday. Good bounce and how many times do you see an apparent breakdown reverse? Hasn't pulled it off just yet but it is giving it a shot.

Oil. 88.66, -1.47. Faded to the 50 day EMA after breaking through Wednesday. Why did it fall? If you listened to the journalism majors it was because the FCliff deal seemed more remote. How about the rise in the dollar? Higher dollar means less dollars needed for each barrel of oil. Hello? McFly?


'Back to the Future'


TECHNICAL SUMMARY

Internals.

NASDAQ
Stats: -29.38 points (-0.96%) to close at 3021.01
Volume: 2.485B (+48.45%)

Up Volume: 490.35M (-457.48M)
Down Volume: 2.31B (+1.558B)

A/D and Hi/Lo: Decliners led 1.95 to 1
Previous Session: Advancers led 1.5 to 1

New Highs: 44 (-50)
New Lows: 31 (+13)

S&P
Stats: -13.54 points (-0.94%) to close at 1430.15
NYSE Volume: 1.328B (+114.89%)

A/D and Hi/Lo: Decliners led 2.03 to 1
Previous Session: Advancers led 2.14 to 1

New Highs: 109 (-63)
New Lows: 28 (+5)

Dow
Stats: -120.88 points (-0.91%) to close at 13190.84

Volume: A throwaway day for the volume numbers as it was quad-expiration. Also moving to year end. Volume exploded but it just doesn't tell us much.

Breadth: After a nice 2:1 Thursday, -2:1 on both NYSE and NASDAQ Friday. Even Steven.


You're Even Steven


THE CHARTS

SP500. Sold to the 20 day EMA on the low then reversed to close near the 10 day EMA. This is not bad action given the news. SP500 did bump the down trendline from September this week and faded, but that is not fatal. Still not the greatest pattern, and the market was rallying in a holiday mode. It could be taken off track by the Cliff so it has to hold this level and continue upside or it likely starts to break down.


NASDAQ. Gapped close to the 200 day SMA on the open then recovered to hold the 10 day EMA itself. Below the 2011 up trendline again, but still trending higher. Could put in another higher low again and continue the move as it holds over the July peaks. Interesting.


Russell 2000/SP400. Nice action, reaching lower then reversing to the recent support and in good position to continue its assault on the September high at 869, just 21 points away.

SP400 midcaps tapped at the 10 day EMA on the low and rebounded nicely. Back below the September high but hardly in jeopardy. Both the small and midcaps are still very strong and acting very well.


SOX. Gapped to the 20 day EMA but reversed to close over the 10 day EMA. Below the 200 day SMA again but held up much better than I expected. Still the one to watch, or at least one of the ones to watch, next week as it tried the 200 day again just 3 points ahead.


DJ30/DJ20. Fell to the 50 day EMA, tapped it, rebounded. Lost 0.9% but that was much less than indicated on the day. That said, the pattern is trending higher but is still not one I love. It is rallying well, has room to rally, but the market must be like a good cornerback and forget about getting burned on the last play if it is going to continue the holiday move.

DJ20. Ignored the selling, held the breakout. Easily.


Summary: The market has rallied since Thanksgiving with a couple of tests. It broke sharply higher Monday and Tuesday on the third leg of the move. A good test and bounce once more and then Friday. The large cap patterns are not my favorite. They can, however, rise on QE4 and the holiday move if there is still a sense that a FCliff deal can be reached. Obama says he is optimistic it can be done post-Christmas. If the market takes him at his word then it can definitely pick up where it left off and rally up through late next week.


LEADERSHIP

Big names. AAPL gapped lower but reversed to flat. AMZN gapped but held the 10 day EMA in a tight range. EBAY showed a nice doji with tail over the 20 day. GOOG gapped lower as AMZN but held the 10 day EMA with a tight doji. That is a great pattern. Down but not in bad shape.

Semiconductors. INTC gapped to the 10 day EMA with a doji. KLAC fell to the 50 day EMA and then reversed to the upside. Nice. ATML gapped and then reversed to flat.

Financial. Lost some ground but JPM, BAC, C, V, etc. all held the 10 day EMA nicely.

Retail. LULU held the 10 day EMA. YUM dives. WSM looked good; not now. Ditto PNRA. ANN decent. Not great action across the board.

Transports. Held up nicely. ABFS, JBHT, KSU all worked so well.

Drugs/Healthcare. JAZZ held up nicely. CELG reached lower then reversed to hold the 20 day EMA. Still quite nice.

Homebuilders/Materials. Decent overall as PHM tapped the 10 day EMA on the low and bounced. KBH gapped and stayed there. Still, solid overall. LPX gapped lower and reversed on volume to a gain. Nice.

Summary: Not bad overall though retailers are very worrisome.


THE MARKET

SENTIMENT INDICATORS

VIX: 17.84; +0.17
VXN: 20.16; +0.84
VXO: 17.12; -0.5

Put/Call Ratio (CBOE): 1.05; +0.19


Bulls versus Bears

Bulls: 46.8% versus 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Continued higher, topping the November peak. Not getting too frothy as in late September but steadily rising. Background: Undercut 35%, the threshold for bullishness, in early June. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 24.5% versus 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. Bouncing upside even as the market rallied. Still quite low overall. On the last run never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For 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.


FRIDAY



The President, with Reid at his side, spoke to the nation after the market closed. He appeared to outline a slimmed down version that would deal with some tax issues now and tackling other tax issues later along with spending cuts. No real partisanship which was somewhat surprising, pleasantly so. He said they would go to Christmas, drink some eggnog, then get back next week. Problem is I don't think republicans will go for that because a bifurcated deal is not what they want. They want leverage to get spending cuts now.

He seemed somewhat peeved he had to come back after Christmas; I suppose we still foot the $20M bill for the entire vacation even if he is not going to be there the whole time. It likely rises as he now has to come back. So much for balancing the budget and showing fiscal responsibility. I keep thinking that in these times that $20M could be divided up in $50K chunks and given to 400 families as a year's worth of wages if the President would do what so many of us are doing this year during these hard times, i.e. stay at home. It isn't as if the White House is a shack.

Seriously, our leaders are going home or to Hawaii, and thus we won't hear anything from them until Thursday. That means the market and the rest of us are 'safe' until then, i.e. no statements over the weekend that might upside things. I could say calm things down as well, but I don't think anything they say would do that.

The market was down on the day but all things considered, the action was much better than most expected. Indeed many are VERY pessimistic about the upside prospects after Friday. I am somewhat concerned myself but I saw things in the technical action on the day that were encouraging. I still don't love SP500 and DJ30 in technical terms, but intraday they were decent and when you look at SP400 and RUTX, they were great.

Thus there may be too much pessimism regarding the prospects for more upside. I do see some upside setups that could rally higher. We can perhaps venture a few of those but it would be tight considering what I am going to say next.

I do believe the market can continue the holiday move. It did not sell out to the downside Friday in a manner that clearly says investors believe the rally has ended, there is no hope for a deal, and it is down from here. Many have written this rally off on the few days it faltered only to see it continue.

So, we could see it hold the line, continue upside on Monday's half day and indeed on Wednesday as well. Then you have the issues. Congress and the President are back and statements start to come out again. There is also the end of the year; with taxes going up there could very well be some pressure to sell positions and bank gain, particularly given the market has rebounded nicely off that November low.

Therefore, we are looking at a multi-pronged approach that we had to modify slightly (and it is really just slightly) thanks to Friday. Recall we were going to ride the rally into Monday and then take some gain and again on Wednesday and Thursday if the move continued. The point was to bank some profit on nice moves and lighten up because there may be pre-year end selling and also because the New Year could bring sell programs in.

The modification is that given Friday there may not be as much gain built in and thus how the market acts Monday is very important. On further upside we will indeed bank gain and lighten up overall. We won't dump everything but on a good move Monday and Wednesday we will be taking gain and overall lighten the upside. We can limit our upside exposure and still keep several plays going by virtue of lessening our number of shares/options for each position.

If the market does not run further upside in a bounce back from Friday, or if it bounces but then struggles, we won't wait. We will start lightening on the upside. The indices came back decently in the face of some ugly news Friday. That was enough to keep us in for a possible continuation bounce next week. If it does not materialize then we want to reduce exposure (but not eliminate it) and see where it lands.

That means we can still have some upside plays in tow for new entries, but I personally am not interested in that other than day trades, trying to get a few percentage points with a big stack of 401(k) money. There is not a lot of time to ride newly initiated longer term plays. Many of these stocks we play are great for capturing intraday gains in addition to the longer term gains of 12%, 15%, 20% and on. Not sure if there is a lot of interest in doing that among this group but that is something that we do every day as well.

In the event the market falters in a rebound attempt or otherwise flounders on Monday or later in the week if a further upside rally occur, some downside plays are appropriate to take advantage of a drop if the lack of a deal on Friday proves to be the death of the rally or if the rally continues Monday and beyond but then starts to suffer from end of year profit taking.

It is ironic to note, however, that before Friday, most market pundits were looking at a continued upside move no matter what. We are more agnostic; the upside looked good but realized it could be derailed near term even with QE4. Near term if the Cliff remains the focus, then it overcomes the QE4 upside push.

Given the year end potential gyrations that means we want to simply be lighter heading into the New Year and take a few new positions based upon the action as outlined above. QE4 is still out there, the economic data is improving (even if the unadjusted numbers are flopping), and there is leadership. If a deal is struck then stocks have reason and an open field to run higher even further.

Thus while we look to lighten up, if the market shakes off Friday and continues to recover, we will keep upside exposure as indicated above. How much depends upon the action Monday and Wednesday. That gives us the opportunity to prosper from the move even through the potentially bouncy year end.

Monday won't be much of a report, just play tables and a summary of the action. Later in the week we will have alerts and light reports. Again, we are looking more for managing existing plays than jumping in on a bunch of new plays and I want to give the staff of traders and myself included a light week to enjoy the fruits of the year.

Have a great weekend and a Merry Christmas!!!!


Support and resistance

NASDAQ: Closed at 3021.01

Resistance:
3024 is the gap point from early May
The 2011 up trendline at 3030
3042 from 5/2000 low and several other price points
3062 is the December 2012 prior peak
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3104-3112 from August and mid-October peaks.
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3000 is the February 2012 post-bear market high
The 50 day EMA at 3000
2999 is the bottom of the August 2012 consolidation
The 200 day SMA at 2991
2988 is the July 2012 high
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low


S&P 500: Closed at 1430.15

Resistance:
1433 from August 2007 closing lows
1434 from early November 2012
1440 from November 2007 closing lows
1445 is a short term down TL from the September 2012 peak
1466 is the September 2012 closing peak and rally closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
1427 is the August 2012 peak
1425 from May 2008 closing highs and the October 2012 low
The 50 day EMA at 1416
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1389
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low


Dow: Closed at 13,190.84

Resistance:
13,413 from the late September 2012 low
13,557 to 13,662
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
The 50 day EMA at 13,117
13,300 to 13,331 is the August 2012 post-bear market high
13,297 is the April 2012, prior post bear market high
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,013
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
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
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak


Economic Calendar

December 17 - Monday
Empire Manufacturing, December (8:30): -8.1 actual versus 2.0 expected, -5.2 prior
Net Long-Term TIC Flows, October (9:00): $1.3B actual versus $3.2B prior (revised from $3.3B)

December 18 - Tuesday
Current Account Balance, Q3 (8:30): -$107.5B actual versus -$104.2B expected, -$118.1B prior (revised from -$117.4B)
NAHB Housing Market , December (10:00): 47 actual versus 47 expected, 45 prior (revised from 46)

December 19 - Wednesday
MBA Mortgage Index, 12/15 (7:00): -12.3% actual versus 6.2% prior
Housing Starts, November (8:30): 861K actual versus 875K expected, 888K prior (revised from 894K)
Building Permits, November (8:30): 899K actual versus 876K expected, 868K prior (revised from 866K)
Crude Inventories, 12/15 (10:30): -0.964M actual versus 0.843M prior

December 20 - Thursday
Initial Claims, 12/15 (8:30): 361K actual versus 345K expected, 344K prior (revised from 343K)
Continuing Claims, 12/08 (8:30): 3225K actual versus 3192K expected, 3213K prior (revised from 3198K)
GDP - Third Estimate, Q3 (8:30): 3.1% actual versus 2.7% expected, 2.7% prior
GDP Deflator - Third Estimate, Q3 (8:30): 2.7% actual versus 2.7% expected, 2.7% prior
Existing Home Sales, November (10:00): 5.04M actual versus 4.90M expected, 4.76M prior (revised from 4.79M)
Philadelphia Fed, December (10:00): 8.1 actual versus -1.3 expected, -10.7 prior
Leading Indicators, November (10:00): -0.2% actual versus 0.2% expected, 0.3% prior (revised from 0.2%)
FHFA Housing Price Index, October (10:00): 0.5% actual versus 0.0% prior (revised from 0.2%)
Natural Gas Inventor, 12/15 (10:30): -82 BCF actual versus 2 prior

December 21 - Friday
Personal Income, November (8:30): 0.6% actual versus 0.3% expected, 0.1% prior (revised from 0.0%)
Personal Spending, November (8:30): 0.4% actual versus 0.3% expected, -0.1% prior (revised from -0.2%)
PCE Prices - Core, November (8:30): 0.0% actual versus 0.1% expected, 0.1% prior
Durable Orders, November (8:30): 0.7% actual versus 0.2% expected, 1.1% prior (revised from 0.5%)
Durable Orders -ex T, November (8:30): 1.6% actual versus -0.2% expected, 1.9% prior (revised from 1.8%)
Michigan Sentiment -, December (9:55): 72.9 actual versus 74.8 expected, 74.5 prior


December 26 - Wednesday
MBA Mortgage Index, 12/22 (7:00)
Case-Shiller 20-city, October (9:00): 3.9% expected, 3.0% prior

December 27 - Thursday
Initial Claims, 12/22 (8:30): 375K expected, 361K prior
Continuing Claims, 12/15 (8:30): 3200K expected, 3225K prior
New Home Sales, November (10:00): 379K expected, 368K prior
Consumer Confidence, December (10:00): 70.0 expected, 73.7 prior
Natural Gas Inventor, 12/22 (10:30): -82 bcf prior

December 28 - Friday
Chicago PMI, December (9:45): 51.0 expected, 50.4 prior
Pending Home Sales, November (10:00): 1.0% expected, 5.2% prior
Crude Inventories, 12/21 (11:00): -0.964M prior

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

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

NASDAQ Struggles on AAPL Deleveraging

MARKET SUMMARY

- FOMC QE4 +2 and stocks are still off.
- Outside of NASDAQ struggling on the AAPL deleveraging, indices look solid, leaders holding up well.
- Inflation as per the government gives the Fed all the room it needs to keep easing, but reality is another matter.
- Industrial production, capacity show solid improvement over a weak October.
- Heading in opposite directions? China PMI up for second time after a year of downside while Japan, Europe plunge.

Stocks still sluggish, test nicely, but history says that after late stage QE, they need to prove they can move upside.

Futures rose early in the session on word that China's flash PMI registered over 50 for the second straight month, this after 12 months of negative reads. Of course this is government data and not the measurable results the world can rely upon, but with so much bad data around the globe and the fact that it is the Christmas season, it seems people, as in the kids in the 'Polar Express,' want to believe.


Believe . . .

So futures were indeed higher. The belief, whether in China or Christmas spirit, however, started to wane as Santa explained in 'Elf'; seems the Christmas cheer was not enough to get the 'clausometer' high enough for the market to reach flight speed.


Shockingly low clausometer reading.

Thus the dream of a good old fashioned family Christmas so treasured by Clark Griswold had to be shelved for another day.


Can I get you any more eggnog? Get you something to eat? Drive you out to the middle of nowhere and leave you for dead?

Despite a CPI that was plenty tame (-0.3% versus -0.2% expected and 0.2% October; Core 0.1% versus 0.1%), futures eroded. Speaking of tame inflation, however, I must note a personal story: 8 years ago I bought a Kenmore Freezer for $499. That same freezer today costs $799, a 60% increase in price. No, there is no inflation, no problem with dollar value erosion.

Perhaps it was Japans manufacturing hitting an 11 month low as its depression, similar to Doc Holiday's hypocrisy in 'Tombstone', knows no bounds.


Poor soul. The strain was too much for him to bear.

Of course old Doc is not the only one with runaway hypocrisy as we are seeing in the fiscal cliff negotiations . . .



Perhaps it was the impasse in the FCliff negotiations as Pelosi complained about families needing to get together for Christmas, Hanukkah, or Kwanza (versus I suppose having . . . jobs?) and Boehner leaving town BUT leaving everyone his cell phone number just in case.

Or perhaps the EU economic issues were a contributing factor as its PMI missed expectations at 46.3 and auto sales hit their lowest in 19 years!

Futures backed off from morning highs and the indices opened lower. They traded modestly negative all session but then caught a downside bid late in the afternoon as word of an elementary school shooting leaving over 20 dead hit the wires. A modest bounce tried to lift stocks but the indices were all negative at the close.

SP500 -5.87, -0.41%
DJ30 -20.83, -0.70%
DJ30 -35.71, -0.27%
SP400 -0.23%
SOX -0.69%
RUTX -0.06%

Of course there was the immediate crossfire about gun control needs, talk of executive orders by the President if Congress didn't act, etc. It is amazing how when trouble hits the Constitution is thrown in the trash, only resurrected when needed to grow government even bigger, the opposite of what it was written for. Thing is, a lot of what we are seeing lately is tied to this notion that the world is coming to an end on the 21st. That is like a full moon to the tenth power with respect to how people act. When that time passes and if we are all still here, this insanity likely dies down.

As for the market, it pretty much left the session in mourning. But it was not a rout. We looked at our positions again and again during the day and they simply, with just a few exceptions, not getting themselves into trouble. Sure AAPL is in real trouble. It released its iPhone 5 in China and one store had all of two people standing in line to get in. Seems AAPL's cache is domestic, and after a big run it is deleveraging just as Europe, the stock markets, etc. have done in this financial crisis.

Outside of AAPL and a few others, however, the action was very calm, very tame. Of course it was like that after QE3 and then broke down. Still, if the leaders are holding the line and acting well, you see if they can come off of a test with renewed vigor. They didn't do it Friday, but it is Christmas, there is a Christmas rally in place, and if investors want to rally stocks, they remain in position to be rallied.


OTHER MARKETS

Dollar. 1.3160 versus 1.3077 euro. Down hard versus the euro but held up decently against all other currencies. After all, with a race to the bottom your currency doesn't make a lot of moves because markets know other central banks will act to offset any advantage your currency might gain (if you call gutting its value gain) via policy actions.


Bonds. 1.71% versus 1.73% 10 year Treasury. Gapped up after holding at the 200 day EMA Thursday. Hard down on the week, trying to rebound post-FOMC announcement.


Gold. 1696.90, -0.20. Gold really went nowhere in the wake of the Thursday dive lower. It continues to hold below the 50 day EMA and mostly work laterally.


Oil. 86.73, +0.84. Working laterally, trying to put in a higher low after failing at the 50 day EMA to start December. Has not turned tail and totally dropped, instead trying to work laterally and build a support level to rally from.


TECHNICAL SUMMARY

Internals.

NASDAQ
Stats: -20.83 points (-0.7%) to close at 2971.33
Volume: 1.772B (-2.15%)

Up Volume: 889.37M (+128.39M)
Down Volume: 896.25M (-163.75M)

A/D and Hi/Lo: Decliners led 1.05 to 1
Previous Session: Decliners led 1.69 to 1

New Highs: 35 (-4)
New Lows: 39 (+7)

NYSE/S&P
Stats: -5.87 points (-0.41%) to close at 1413.58
NYSE Volume: 588M (-2.49%)

A/D and Hi/Lo: Decliners led 1.12 to 1
Previous Session: Decliners led 2.32 to 1

New Highs: 79 (+11)
New Lows: 30 (-4)

Dow
Stats: -35.71 points (-0.27%) to close at 13135.01


Volume: Trade down 2% on both NASDAQ and NYSE on a holiday Friday and after the CT tragedy took the life out of the market and the country. Volume remains elevated overall, showing some distribution on the week but also the indices are at support so a bit of higher volume shows some buyers hanging in and picking up positions.

Breadth. Very modest at -1.1:1 on both exchanges. No major weakness, just a modest fade on the session and really on the end of the week.



THE CHARTS

SP500. Faded to the 50 day EMA on lighter trade after a tombstone doji Wednesday on the FOMC decision. Very orderly fad and still in position to bounce off the late October low and the August consolidation. As before, it has left itself in position to bounce and all it needs is for the buyers to step in.


NASDAQ. This one is the worrisome one as it gapped through the 200 day SMA, the 50 day EMA and the 20 day EMA. It is undercutting the late October low as well as the July highs. The 200 day SMA and 50 day EMA are virtually coincident, indicating a negative cross is coming. Not a complete blowout of support and of course it can still reverse; seen that a lot the past couple of years. AAPL is a major drag on NASDAQ; the main drag. We have a downside play on NASDAQ at the ready in the event it cannot pull out of this decline.


Russell 2000/SP400. Was up on the day but could not hold it to the close. Still a solid pattern, having filled the Tuesday upside gap out of the consolidation. It is now sitting at the prior consolidation and has put itself in position to bounce once more. Now we wait and see if they can do it.

SP400 midcaps again faded to just below the 10 day EMA and are flirting with undercutting the October and November interim peaks. No major break but needs to start firming and holding for a rebound move.


SOX. Faded further, holding at the 10 day EMA on the close after a brief undercut. Failed at the 200 day SMA and prior peaks and lows and now is at the lick log: will it bounce to take them on again or has it shot its last bolt as Miss Havelock was told in 'For Your Eyes Only'?




DJ30/DJ20. Faded again but held the 10 day EMA nicely. DJ30 is still not a pattern I love but it is working on it, and if it bounces here has put in a right shoulder to a possible inverted head and shoulders. Indeed, the risk/reward is very good for a play up to the interim highs if it does in fact hold at this near support.

DJ20. Four days straight DJ20 has pushed to the top of its range only to be rebuffed. Still fighting at the top of the range.


Summary: The indices edged lower for the most part, and that kept them at near support and in the position to bounce if they just can get the bids. NASDAQ is the problem child given it is joined at the hip with AAPL. Outside of those co-dependent entities the indices are in position to bounce and there was not really any damage done to the leaders on the week.


LEADERSHIP

Big names. AAPL gapped lower close to the November intraday low. Tells NASDAQ's story. AMZN is trying to hang on. EBAY dropped over 1%. Any wonder why the midcaps and small caps were providing most of the leadership?

Semiconductors. Edged lower overall but some names are not bad. TXN was up. INTC has a nice 1-2-3 pullback in place. Some of the smaller names that helped leader earlier are still testing. If they can hold and bounce the chips become much more interesting.

Financial. The banks are still holding their lateral moves, flat-lining for the week. Brokerages, e.g. MS, started moving higher on the week and indeed added gains Friday. Still very promising sector.

Retail. Still as mixed as can be. The discount variety stores are getting hammered. DLTR, DG, even TGT. The big box department stores are not much better, e.g. JWN, M. Specialty retailers are faring better, e.g. LULU, LTD, CAB.

Transports. Truckers still look good, e.g. ODFL, ABFS. Rails are mixed: CSX versus KSU. Airlines have jumped: DAL, LUV.

Drugs/Healthcare. Still setting up nicely. ISRG, OSIR, ARNA, CELG, ONXX.

Summary: There is still leadership and stocks still in great position to move higher.


THE MARKET

SENTIMENT INDICATORS

VIX: 17; +0.44
VXN: 20.19; +0.72
VXO: 17.46; +0.75

Put/Call Ratio (CBOE): 0.89; +0.05

Bulls versus Bears

Bulls: 45.7% versus 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Okay, right back up to the peak two months back after peaking in September. Working back up with the market bounce. Got close to 35% on the last dip, but no cigar. Background: Undercut 35%, the threshold for bullishness, in early June. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 23.4% versus 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. Bears are falling faster than bulls are rising, somewhat ironic given the fiscal cliff issues. Now at the level hit almost two months back just a bulls are rising toward that level. On the last run never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For 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.


MONDAY

Yet another heavy week of economic data along with more fiscal cliff machinations. Throw on top of that the outcry over what happened in CT and the threats of executive orders on guns and you have another week of peace on earth and good will toward men.


More fun on the Hill this week.

The background is what the background is. The Fed has spoken. QE is here to stay until the Fed says it won't be here whether or not it talks of 6.5% unemployment as some important signpost or not. Japan is just now wanting to vote expressly on unending monetary policy. We have followed Japan's path and thus we are nowhere near ending stimulus. Indeed I would put the Fed's focus on employment above its mandated focus on price stability and maximized growth. It has added its own third leg, unemployment.

Thus while specific economic reports and stories will impact the market on a day to day basis, the stage is basically set: open-ended QE and a huge deficit with no economic growth to speak of. The main factors at that point are the Cliff, new regulations from the Administration, and how all of that impacts growth prospects. In short, the market faces the same challenges of the past few months, just closer in time now.

Therefore you go back and look at the technical picture to show how the market is interpreting the events. Right now the indices are testing the second run off the November low. They are at a crucial point of support where they either decide to bounce on into Christmas and make this a true holiday rally spanning both Thanksgiving and Christmas or fold and head lower in a move akin to the post-QE3 rollover.

Leaders are still mostly holding on just fine and are in position to bounce. As noted, Friday we looked at our plays again and again and were pleased with the vast majority. No technical issues to cause alarm.

At the same time, the post QE3 test was very normal and ordinary, and then after a week the bottom dropped. Thus while we like the action of the plays we need to be vigilant and if the leaders cannot make bounces off the pullback then lighten up the upside as the holiday rally slows its momentum.


Support and resistance

NASDAQ: Closed at 2971.33

Resistance:
2977 to 2980 is the bottom of the late October 2012 consolidation, July 2012 peak
2988 is the July 2012 high
The 200 day SMA at 2989
The 50 day EMA at 2989
2999 is the bottom of the August 2012 consolidation
3000 is the February 2012 post-bear market high
3019 is the up trendline from 2011
3024 is the gap point from early May
3026 from 10/2000 low
3042 from 5/2000 low and several other price points
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low


S&P 500: Closed at 1413.58

Resistance:
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1434 from early November 2012
1433 from August 2007 closing lows
1440 from November 2007 closing lows
1446 is a short term down TL from the September 2012 peak
1466 is the September closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
The 50 day EMA at 1411
1408 is the late October 2012 range closing low
1406 is the early May 2012 peak
1402.22 - 1400 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1387
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low


Dow: Closed at 13,135.01

Resistance:
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
The 50 day EMA at 13,085
13,058 from the May 2008 peak on that bounce in the selling
13,056 is the February 2012 high
The 200 day SMA at 13,004
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
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
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak


Economic Calendar

December 14 - Friday

CPI, November (8:30): -0.3% actual versus -0.2% expected, 0.1% prior
Core CPI, November (8:30): 0.1% actual versus 0.1% expected, 0.2% prior
Industrial Production, November (9:15): 1.1% actual versus 0.3% expected, -0.7% prior (revised from -0.4%)
Capacity Utilization, November (9:15): 78.4% actual versus 78.0% expected, 77.7% prior (revised from 77.8%)


December 17 - Monday
Empire Manufacturing, December (8:30): 2.0 expected, -5.2 prior
Net Long-Term TIC Fl, October (9:00): $3.3B prior

December 18 - Tuesday
Current Account Imbalance, Q3 (8:30): -$103.6B expected, -$117.4B prior
NAHB Housing Market , December (10:00): 47 expected, 46 prior

December 19 - Wednesday
MBA Mortgage Index, 12/15 (7:00): 6.2% prior
Housing Starts, November (8:30): 873K expected, 894K prior
Building Permits, November (8:30): 876K expected, 866K prior
Crude Inventories, 12/15 (10:30): 0.843M prior

December 20 - Thursday
Initial Claims, 12/15 (8:30): 345K expected, 343K prior
Continuing Claims, 12/08 (8:30): 3192K expected, 3198K prior
GDP - Third Estimate, Q3 (8:30): 2.7% expected, 2.7% prior
GDP Deflator - Third Est., Q3 (8:30): 2.7% expected, 2.7% prior
Existing Home Sales, November (10:00): 4.90M expected, 4.79M prior
Philadelphia Fed, December (10:00): 1.0 expected, -10.7 prior
Leading Indicators, November (10:00): -0.2% expected, 0.2% prior
FHFA Housing Price Index, October (10:00): 0.2% prior
Natural Gas Inventories, 12/15 (10:30): 2 prior

December 21 - Friday
Personal Income, November (8:30): 0.3% expected, 0.0% prior
Personal Spending, November (8:30): 0.3% expected, -0.2% prior
PCE Prices - Core, November (8:30): 0.1% expected, 0.1% prior
Durable Orders, November (8:30): 0.2% expected, 0.5% prior (revised from 0.0%)
Durable Orders -ex Transports, November (8:30): -0.4% expected, 1.8% prior (revised from 1.5%)
Michigan Sentiment - Final, December (9:55): 74.0 expected, 74.5 prior

End part 1 of 3

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

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Stocks Advance, But Still Just a Slow Burn

MARKET SUMMARY

- Stocks advance, but still just a slow burn versus a new surge.
- Jobs increase (again at the low pay end), unemployment rate falls (again because people disappear), but there is some improvement as well.
- Michigan Sentiment takes a post-election reality turn.
- What's with all the earthquakes?
- Stocks taking their time in trying to break higher, allowing more to set up, but they need to get on with the Christmas rally.
- If the Fed announces QE4, will the market react the same as it did to QE3?

Market gets what it should want but still hesitates.

Futures were iffy and trending lower, but when the jobs report hit the wire with 146K jobs (a 56K beat) and unemployment down to 7.7%, the headline readers jumped in and futures jumped to the upside. Sharply upside. Looked as if the market finally got the catalyst it needed to break the weeklong lateral consolidation.

After the initial pop, however, stocks again remained tentative. The highs were hit near the opening bell. Perhaps investors were not as enthralled with the jobs report as the initial stock jump suggested. They also may not have been too pleased with Michigan sentiment dropping over 8 points as expectations plummeted 13 points.



All that pre-election hope is meeting reality. Rhetoric and lofty, less than factual statements only go so far when citizens face the same economic problems.

There was another, non-market disturbing news theme. Early in the morning I read about a 7.3 magnitude earthquake in Japan near the reactor that went down in the prior quake and tsunami.



Later in the day New Zealand reported a 6+ quake. New Guinea reported a quake as well. On top of the natural disasters are the usual manmade ones. Unrest in Egypt. Syria's leader reportedly thinking of using chemical weapons on his own people. North Korea is readying the test launch of another ballistic missile and Japan has promised to shoot it down. Financial upheaval on the entire European continent and the US is no bastion of financial safety. All that is needed are some locusts, blood in the seas and there you go. December 21 is the end of the Mayan calendar, just 13 more shopping days left!




Plagues may be coming, but so may be more Fed stimulus. The obvious question is whether that would be a plague or deliverance. Friday there was plenty more speculation whether the Fed would come to the table with more QE. That move was rather widely expected until the Friday report. Indeed, many still believe the Fed will act either regardless of the report or because the report's internals were not that strong, presenting more of the same trends that indicate a less than healthy jobs market.

Perhaps continued anticipation of additional QE is why the market, after not finding solace in the jobs report, held its ground.

Stocks started nicely higher on the jobs headlines, faded on the Michigan Sentiment miss, and continued lower to midmorning. As is often the case, midmorning was the turning point. Stocks found bottom roughly at the Thursday close and started back upside. Slow, steady, boring, but they recovered ground into the close. SP500 never made it back to the session high and NASDAQ barely made it off the day's lows; it was not strong but they did recover. Indeed, DJ30 and its pattern that we hated the most led the market as it did manage to close out at session highs.

In the end it was another mixed showing, mostly upside, but again no great upside break. The indices set up for a nice upside break with a tight lateral move, and all they are doing at this juncture is melting to the upside. Not terrible action but certainly not a renewal of buyers, not a surge of upside interest. Don't get me wrong; stocks can melt upside no problem. Those just are not always the greatest upside runs. Kind of like that 'light drizzle' discussed Thursday night.



Kate: I had this feeling about him . . . It wasn't exactly a thunderclap or a lightning bolt, it was more like a . . .
Luc: Light drizzle?


SP500 4.13, 0.29%
NASDAQ -11.23, -0.38%
DJ30 81.09, 0.62%
SP400 0.11%
SOX 0.22%
Russell 2000 0.06%


OTHER MARKETS

Dollar. 1.2930 versus 1.2963 US dollar/Euro. The dollar was much stronger versus the euro on the news of the jobs report, but as the day wore on the dollar lost its mojo. Compared to other currencies, however, the dollar finished strong, rebounding from a week of weakness. Note how it bounced off the October high, using that as support.


Bonds. 1.63% versus 1.57% 10 year Treasury. Stocks may not have been totally overwhelmed by the jobs report, but bonds were taking it seriously, selling off hard to the 50 day EMA. Perhaps this is a signal the Fed will not act with a QE4. Some people seem to believe it is a fait accompli. Bonds were not so sanguine.


Gold. 1705.10, +3.30. Not much of a gain but it is the action Wednesday to Friday is what is interesting. Gold tapped at the same low three straight sessions and bounced off of that support. Working on setting up that double bottom over the 200 day SMA.


Oil. 85.98, -0.28. Faded a bit further in a down week overall. Oil is at some support but it failed at the 50 day EMA and that suggests it continues to weaken in its downtrend below the 50 day EMA.


TECHNICAL SUMMARY

Internals.

Stats: -11.23 points (-0.38%) to close at 2978.04
Volume: 1.591B (-5.8%)

Up Volume: 673.5M (-506.5M)
Down Volume: 905.69M (+385.41M)

A/D and Hi/Lo: Decliners led 1.16 to 1
Previous Session: Decliners led 1.04 to 1

New Highs: 51 (+8)
New Lows: 30 (-9)

S&P
Stats: +4.13 points (+0.29%) to close at 1418.07
NYSE Volume: 551M (-1.96%)

A/D and Hi/Lo: Advancers led 1.22 to 1
Previous Session: Advancers led 1.13 to 1

New Highs: 97 (+13)
New Lows: 26 (-3)


Volume: Lower trade Friday after already declining trade on the week. Just not a lot of volume pushing on stocks and they certainly are not going very far with such a light push. Between holidays so a bit lighter volume is normal, so not sweating it too much. Just a bit worrisome that the market is getting the catalysts it seems would break it higher, but they are not doing it even with low trade.

Breadth. Flat yet again, but then again, the market has not been racing on the week either.


THE CHARTS

SP500. Continued a modest move off the 50 day EMA on more below average volume. Trying to get some momentum off the test of the mid-November relief bounce. Moving up but just not a lot of strength. Light drizzle, eh? Financials were rallying , however, and thus SP500 moved up to the mid-August high. Still at resistance and on low volume to boot. Okay, yes there are plenty of reasons to not like it, but SP500 continues to the upside.


NASDAQ. Amazing how NASDAQ follows AAPL. That is what happens when one stock is forecast by GS to account for 33% of the Q4 GDP consumption and it consequently comprises the bulk of the index's market cap. Anyway after the Thursday AAPL-led bounce NASDAQ gapped upside through the 200 day SMA and near the 2011 up trendline only to reverse when AAPL reversed. NASDAQ's pattern is very similar to SP500, kind of an inverted head and shoulders and thus kind of positive. That leaves it in position to rally but it certainly is having a hard time getting the move going. Needs AMZN, EBAY, DELL, CSCO, etc. to continue their rallies.


Russell 2000/SP400. Gapped upside but faded to flat, still working on the lateral move started late November when the small caps gapped through the down trendline. Nice, looks good, still waiting on the move.

SP400 midcaps are bleeding higher similar to SP500, posting four consecutive upside moves that took the index right up to . . . the same resistance it tested Monday when it shot higher but reversed. Still has the October and November highs it is working on. Hate these bleeds higher.


SOX. Solid Thursday bounce off the 50 day EMA and then a doji with a slight gain Friday. Not the move we wanted to see and SOX is right at some resistance. Nonetheless it showed some leadership; the chips are trying to turn.


DJ30/DJ20. DJ30 led the market Friday. Bumped the 50 day EMA for a week, we hated the pattern, and so it broke upside through resistance at 13,100.


DJ20. Bounced of the 50 day EMA early in the week and through the 200 day SMA. Modest gain Friday and still looks in position to continue its move to the top of the range.

Summary: Not making a sharp break, just continuing the lateral move in the case of the midcaps, bleeding higher in the case of SP500, actually jumping upside for the Dow, or falling with AAPL as is NASDAQ. Quite mixed action, but all of it is inside of a fairly tight range, not giving back the rally that started Thanksgiving week.


LEADERSHIP

Big names. AAPL reversed the Thursday gains and sold. AMZN is slowing its move, testing in a way as it slows the gain. EBAY is holding the 10 day EMA and looks very good in this test as well. GOOG gapped upside then reversed. Still a good pattern. These leaders are a bit tired but GOOG is ready to takeover and lead.

Financial. Continuing the upside move led by the big banks. JPM jumped over 2.5%, C added 1.7% to its solid weekly gain. Not all financials are moving; credit services lag.

Retail. A very mixed bag so to speak. You know, holiday shopping and all. LTD enjoys a nice pullback. COH looks as if it wants to bounce off a rounded bottom. M, JWN -- the big boxes in the malls -- are holding up but are not in position to surge. Eateries are struggling overall.

Tech. Still weak but trying to improve in some places. ADTN is interesting. FFIV is at the bottom of the channel and it may just be ready for an upside break. JNPR broke through the 200 day SMA. Some moves, some setting up, a lot not really in position to take the lead.

Industrial. CAT cleared the recent highs on the week. DE is decent in a two month pennant. JOY is trapped below the 50 day EMA.


THE ECONOMY

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html

Okay, here is the jobs scoop: better headlines, some better indications, but some still very troubling longer-term trends.

Most pundits admitted the headlines did not tell the true story, but they also said there were signs of continued improvement. There were. Of course the improvement was not the paltry number of jobs even if it was a big beat over very terrible expectations. The silver lining most saw was the 465K non-seasonally adjusted new workers added; that was in line with pre-crisis trends at this time of year and shows that retailers are getting back to expectations of a solid consumer. Why I am not sure; every piece of data seen of late shows consumption is lower (the most recent GDP iteration is the case in point), but perhaps they know something the data is not showing. Or, perhaps they are hoping for something that is not there, forgetting a couple of old but useful sayings:

Those who expect nothing are never disappointed.
No brain, no headache.


No brain . . .

Nonfarm Payrolls, November (8:30): 146K actual versus 90K expected, 138K prior (revised from 171K)

Nonfarm Private Payrolls, November (8:30): 147K actual versus 120K expected, 189K prior (revised from 184K)

Unemployment Rate, November (8:30): 7.7% actual versus 8.0% expected, 7.9% prior

Hourly Earnings, November (8:30): 0.2% actual versus 0.1% expected, 0.0% prior

Average Workweek, November (8:30): 34.4 actual versus 34.4 expected, 34.4 prior


Here are the less covered facts, the seedier side of the report. Please ask small children and those who can't handle the truth to leave the room.

FIRST, the average workweek remained a meager 34.4 hours for about the tenth month straight (or so it seems). There is simply no growth in hours worked despite all of the talk of jobs added each month. Why does this matter? Employers don't hire when they are not working their employees to the point the employees are learning the words to that 1977 classic country song by Johnny Paycheck, 'Take this Job and Shove It.' Economic times were bad then as well. How appropriate.



A corollary to the 'work them until they quit' rule is the employee view when times are bad and jobs are scarce: 'keep your head down, shut up, keep job.' Those who want to work are happy to have a job and are simply doing their job. Thus they are willing to take the hours and the low pay for a paycheck. Here is the rub, however, in two parts. Part One, the hours just are not there because there is not enough work to keep them for long hours. Or, Part Two, the work is there but employers cannot get enough skilled laborers and thus they have to turn down work and thus the hours remain low overall. We are hearing BOTH from our business contacts as discussed below.


Unemployment rate falls to 7.7% on less workers looking for work. Nothing new there.

SECOND, and much more interesting and intriguing, is the continuing decline in the labor force. It came in at a sterling 63.6%, falling 0.2%. Can you fathom that in the United States almost 40% of those capable of working ARE NOT working?

350,000 more workers left the workforce. Fewer and fewer people are looking for work. Thus the unemployment rate fell to 7.7%. No job, no prospects, and most importantly, no income to tax to pay into the Treasury.


Investor's Business Daily

If you pay someone to do nothing, he will do nothing -- Jon Johnson

Moreover, why even take a job if it is there and doesn't pay any more than you can get from the various government programs that you can stack one upon the other. I saw a story on CNBC today that highlights part of what I discussed a week ago about the effort to find a job and work versus simply collecting benefits. Phil Lebeau talked to machine shops making oil and gas production and exploration items that had the work but could not keep people at the starting level interested in doing the work. After a few days or even a day they throw in the towel because they can sit and do nothing and have as much disposable income as they made as an apprentice. A machine shop paying $13/hour for an apprentice translates into about $25K for the year. You can sit on your duff and collect benefits and then do a little cash only work on the side and live better than the poor schmuck who works 9 to 5. As I always say, if we want to pay people to do nothing, they will do nothing. That is what we are finding out but are not rectifying.


Wal-Mart greeter workforce?

THIRD, we see more of that same problem of job quality versus quantity, and who the jobs are going to. Wages are stagnant, and in real terms are declining. Personal Income and Spending and the GDP revision show this. Most jobs created are in the lower third of the income scale. That has been the case during this entire recovery. The numbers are striking.



Who is working those jobs? As we have reported before, they are going to the older workers.

November:
16 to 19 years: 6K
20-24 years: 62K
25-54 years: -359K
55-69: 177K

The 25 to 54 demographic is the prime wage earning segment. It is getting crushed. The middle class the President champions is being destroyed by his policies.

Don't believe it? Let's look at the numbers since January 2009:
55-69: 4,000,000
16-19 and 20-24 and 25-54: -3,000,000

Shocking.

Zero Hedge put it in graphic form:




Low hourly wages, older workers getting all the jobs. What jobs are these?



Hi. Welcome to Wal-Mart. How may I help you?






THE MARKET

SENTIMENT INDICATORS

VIX: 15.9; -0.68
VXN: 18.35; -0.14
VXO: 16.24; -0.82

Put/Call Ratio (CBOE): 0.8; -0.12


Bulls versus Bears

Bulls: 43.6% versus 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Big jump as investors react to the Thanksgiving rally. Getting right back to where they were a month back ahead of the selling. Got closer to 35% but no cigar. Background: Undercut 35%, the threshold for bullishness, in early June. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 25.5% versus 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. What goes around comes around. Bears are fading to the level hit almost two months back just a bulls are rising toward that level. On the last run never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For 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.


MONDAY

Stocks moved up on the week but were a letdown overall, unable to make that big upside break after a good lateral consolidation. If they survive the weekend, they will still be in position. So far no major catastrophe has hit. The bleed higher has not gone too far to take away the consolidation's impact, and it hasn't destroyed too many consolidation attempts (they move higher before they are ready and then flop).

Still a lot of data this coming week with the FOMC meeting the early week highlight. The Friday jobs report renewed the debate regarding any further QE, but frankly Bernanke said he would not remove any until the economy was really improving. Of course that doesn't mean he will ADD to it if things are better. It is 50-50 in our book though some say it is a done deal.

Question is, if there is QE4 will that have any positive impact? Will it have any negative impact? Stocks rallied into September on the promise of QE3 then sold on the announcement. Of course, that was a big rally. This recent move is a blip, an oversold bounce that has left the large cap indices with very questionable patterns. Not that much anticipation. Either not enough time to get in a good rally ahead of more stimulus or perhaps investors simply believe any more stimulus won't have as much impact. QE3 was all in the anticipation, not in the having.



After a time you may find that having is not so pleasing a thing after all as wanting. It is not logical, but it is often true. -- Spock from 'Amok Time'. A play on the old market adage, buy on the rumor, sell on the news.

The point I was getting to (albeit slowly): will there be a post-FOMC announcement selloff as in September? Could be, but as noted, this has not been much of a move at all and has not been that powerful. Some strong leaders for sure (AMZN, EBAY), but new ones are not exactly waiting in line to take their place at the front. That is always the most important tell in a rally, and that keeps us, despite the apparent upside bias in the market, concerned about the longevity of this move. Again, there still isn't much of a pattern by SP500 and DJ30; they can continue higher, but this is more of a reaction than a base. That and the leadership issue raise serious doubts for us and this rally.

For now, however, there are stocks still attempting to set up even with the drift higher. The indices certainly look as if they want to continue the holiday rally (I will call it that as it spans, thus far, Thanksgiving and the period leading into Christmas). As noted, to do that they need more stocks to take the torch and lead. Many stocks have bounced from weak patterns and are trying to figure out what they do next. Not the best patterns to chase.

Others, however, are in better tests after breaking from good bases (e.g. EBAY) or are just coming off rounded bottoms (e.g. GOOG, COH). If they move we will use them to make money before the year end. After that, more taxes on your income, and a tax on each financial transaction. New year, new issues, but making money is still the way to get your way.

So, we will grab plays as they show themselves and ride them in the continuing move. If stocks want to rally into Christmas (or 12-21 if that is it), then we are going to ride it for all it is worth. If they stumble post FOMC, well then the indices will test that prior low and try to set up a retracement double bottom or some other pattern. Watch for a post-FOMC reversal signal such as a surge then purge on high volume or a move higher that just runs out of volume and MACD does not follow higher. If no topping signals show up, , happy holidays!


Support and resistance

NASDAQ: Closed at 2978.04

Resistance:
The 200 day SMA at 2988
2988 is the July 2012 high
The 50 day EMA at 2992
2999 is the bottom of the August 2012 consolidation
3000 is the February 2012 post-bear market high
3008 is the up trendline from 2011
3024 is the gap point from early May
3026 from 10/2000 low
3042 from 5/2000 low and several other price points
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
2977 to 2980 is the bottom of the late October 2012 consolidation
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low


S&P 500: Closed at 1418.07

Resistance:
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1434 from early November 2012
1433 from August 2007 closing lows
1440 from November 2007 closing lows
1464 is the June up trendline
1463 is the September closing high
1466 is the September closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
The 50 day EMA at 1409
1408 is the late October range closing low
1406 is the early May 2012 peak
1402.22 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1386
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low


Dow: Closed at 13,155.13

Resistance:
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
13,058 from the May 2008 peak on that bounce in the selling
The 50 day EMA at 13,061
13,056 is the February 2012 high
The 200 day SMA at 12,998
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
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
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak



Economic Calendar

December 3 - Monday
ISM Index, November (10:00): 49.5 actual versus 51.2 expected, 51.7 prior
Construction Spending, October (10:00): 1.4% actual versus 0.4% expected, 0.5% prior (revised from 0.6%)
Auto Sales, November (14:00): 5.2M prior
Truck Sales, November (14:00): 6.0M prior

December 5 - Wednesday
MBA Mortgage Index, 12/01 (7:00): 4.5% actual versus -0.9% prior
ADP Employment Change, November (8:15): 118K actual versus 125K expected, 157K prior (revised from 158K)
Productivity-Rev., Q3 (8:30): 2.9% actual versus 2.7% expected, 1.9% prior
Unit Labor Costs -Rev., Q3 (8:30): -1.9% actual versus -0.8% expected, -0.1% prior
Factory Orders, October (10:00): 0.8% actual versus -0.1% expected, 4.5% prior (revised from 4.8%)
ISM Services, November (10:00): 54.7 actual versus 53.7 expected, 54.2 prior
Crude Inventories, 12/01 (10:30): -2.357M actual versus -0.347M prior

December 6 - Thursday
Challenger Job Cuts, November (7:30): 34.4% actual versus 11.6% prior
Initial Claims, 12/1 (8:30): 370K actual versus 382K expected, 395K prior (revised from 393K)
Continuing Claims, 11/24 (8:30): 3205K actual versus 3275K expected, 3305K prior (revised from 3287K)

December 7 - Friday
Nonfarm Payrolls, November (8:30): 146K actual versus 90K expected, 138K prior (revised from 171K)
Nonfarm Private Payrolls, November (8:30): 147K actual versus 120K expected, 189K prior (revised from 184K)
Unemployment Rate, November (8:30): 7.7% actual versus 8.0% expected, 7.9% prior
Hourly Earnings, November (8:30): 0.2% actual versus 0.1% expected, 0.0% prior
Average Workweek, November (8:30): 34.4 actual versus 34.4 expected, 34.4 prior
Michigan Sentiment, December (9:55): 74.5 actual versus 82.4 expected, 82.7 prior
Consumer Credit, October (15:00): $14.2B actual versus $9.9B expected, $12.2B prior (revised from $11.4B)

December 11 - Tuesday
Trade Balance, October (8:30): -$42.7B expected, -$41.5B prior
Wholesale Inventories, October (10:00): 0.4% expected, 1.1% prior

December 12 - Wednesday
MBA Mortgage Index, 12/08 (7:00): 4.5% prior
Export Prices ex-ag., November (8:30): 0.2% prior
Import Prices ex-oil, November (8:30): 0.3% prior
Crude Inventories, 12/08 (10:30): -2.357M prior
FOMC Rate Decision, December (24:30): 0.25% expected, 0.25% prior
Treasury Budget, November (14:00): -$113.0B expected, -$137.3B prior

December 13 - Thursday
Initial Claims, 12/08 (8:30): 375K expected, 370K prior
Continuing Claims, 12/01 (8:30): 3200K expected, 3205K prior
Retail Sales, November (8:30): 0.4% expected, -0.3% prior
Retail Sales ex-auto, November (8:30): 0.0% expected, 0.0% prior
PPI, November (8:30): -0.5% expected, -0.2% prior
Core PPI, November (8:30): 0.1% expected, -0.2% prior
Business Inventories, October (10:00): 0.4% expected, 0.7% prior

December 14 - Friday
CPI, November (8:30): -0.2% expected, 0.1% prior
Core CPI, November (8:30): 0.1% expected, 0.2% prior
Industrial Production, November (9:15): 0.4% expected, -0.4% prior
Capacity Utilization, November (9:15): 78.0% expected, 77.8% prior

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

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

Technorati tags: stock trading stock market investing Jon Johnson InvestmentHouse.com

Some Market Leaders Fail, Some Return to Prominence

MARKET SUMMARY

- A bit of indecision ahead of the weekend after a second week of rallying.
- Indices hold breaks of resistance.
- Fiscal Cliff negotiations 'almost nowhere' but beware: a 'framework' has been established, meaning a bad deal that won't solve the problem will be cobbled together.
- Leaders: some market leaders fail, some leaders return to prominence.
- Disposable income continues its negative ways.
- Chicago PMI expands but really contracts.
- Week three of the rally begins. Still don't like the look but it keeps moving higher. Until a deal is struck, it very well could continue on QE4 speculation.

A pause after second week of the fiscal deal/QE4 anticipation rally.



Remember the June to September move? It didn't take too long to figure it was in anticipation of QE3. QE3 was announced, the market jumped higher, but then the move was done and stocks sold off into November.

Now stocks are up two weeks even in the face of the fiscal cliff. A selloff to the 61% Fibonacci retracement, an oversold bounce, then the idea of a budget deal, and now, yes, a new round of QE, has helped SP500 to a solid 5% bounce.

Ahead of the weekend stocks developed a bit of the cold feet syndrome. Thursday the indices broke next resistance , but in some cases they still have continuing resistance to face, e.g. SP500.

They also have to deal with the ongoing fiscal cliff so-called negotiations. The market, as noted, seems to have assumed a deal will be reached. Ironically, tonight a M*A*S*H rerun story line was about the end of the war. Everyone celebrated and partied, then they found out it was just another false alarm and it was back to harsh reality.


The war is over! No it's not . . .

Friday there was more reality as the President rolled out the same old line: give middle class tax cuts now (i.e. renew those and let the others expire) and deal with the other issues later. That is called the ol' Potomac two-step (from 'Clear and Present Danger').

Boehner's response: 'Right now we're almost nowhere.' This after Mitch McConnell broke out in laughter after Geithner's offer of $1.6T in tax hikes, $50B in Keynesian stimulus, and the authority to raise the debt ceiling at will. Sure sounds as if they are almost nowhere.


Obama: It's called the Potomac two-step.
Boehner: I don't dance.

Well, maybe he does dance. In generally denying any progress today Boehner let slip one of the code words: framework. Whenever you hear that word get ready for a punt. Framework means Boehner will offer the $800B in higher taxes he thought was agreed to during the debt ceiling negotiations versus Obama's $1.6T. From there they split the baby in some way and then they actually do kick the can into 2013 for the truly important aspects involving budget and entitlement cuts. But you know what, the bargaining power will be gone and nothing of substance will result. Thus we can only hope that is not the case. It would be, however, against that old DC tradition of avoiding any action until utter disaster strikes.

Ah those are the undercurrents, the sausage making that is so confusing and disturbing to many. Perhaps that is why so many tune out our leaders when they engage in trying to resolve hotly divided issues. The confounding aspect of this one for not only republicans but some democrats (e.g. Senator Schumer) is that the President is putting a political move (raising taxes on those making $200K or more) over the good of the country: taxes and the cliff will cause a recession according to both sides and independent think tanks but that does not seem to matter. That is not my observation but one from a Clinton advisor.

Nonetheless the market seems relatively comfortable with the status quo. As noted investors appear to believe a deal will come, kick the can or no, and that the Fed will try and preemptively grease the wheels with some QE4. Thus the rally on the week and thus the hold of the gains into the weekend.

What was that late surge? MSCI rebalance forced a lot of buys and sells late, jumping stocks upside and pumping up the volume. Outside of that it was a very deliberate, go nowhere session after the two week rally bumped into the weekend. They held their gains and the Thursday break of resistance on NASDAQ et al, but they also have to deal with some more resistance near term. We didn't expect much on the day, and it delivered.

SP500 0.23, 0.02%
NASDAQ -1.79, -0.06%
DJ30 3.76, 0.03%
SP400 0.04%
SOX -0.13%
RUTX -0.16%


OTHER MARKETS

Dollar. 1.3000 versus 1.2974 euro. Again the dollar tried the 50 day EMA on the high and again it was rebuffed. Thought it would be easy for the dollar to resume the upside given the one-day dump two Fridays back. Not. It bumped the March peak two weeks back and rolled over. Head and shoulders is getting close and looks as if it may have solidified.


Bonds. 1.61% versus 1.62% 10 year Treasury. Still at the 20 day EMA, still testing the prior break higher. With talk of QE4 as a 'just in case' measure from the Fed, bonds have a natural bid as the next obvious choice for more Fed asset buying.


Gold. 1713.30, -16.20. Gold sold back Wednesday and could not recover off the 50 day EMA, closing out the week at that level. If there will be stimulus gold should rally. It is struggling a bit but in position to move higher still and continue the bounce off the 200 day SMA.


Oil. 88.91, +0.84. sold the first part of the week then recovered Thursday and Friday. Right back to the 50 day EMA on the Friday close, exactly where oil stalled the prior touches. Critical step for oil.


TECHNICAL SUMMARY

Internals.

NASDAQ
Stats: -1.79 points (-0.06%) to close at 3010.24
Volume: 2.027B (+16.29%)

Up Volume: 1.11B (-120M)
Down Volume: 1.06B (+569.25M)

A/D and Hi/Lo: Decliners led 1.04 to 1
Previous Session: Advancers led 2.58 to 1

New Highs: 53 (-27)
New Lows: 26 (+1)

NYSE/S&P
Stats: +0.23 points (+0.02%) to close at 1416.18
NYSE Volume: 756M (+19.81%)

A/D and Hi/Lo: Advancers led 1.24 to 1
Previous Session: Advancers led 2.53 to 1

New Highs: 146 (-31)
New Lows: 14 (-1)

Dow
Stats: +3.76 points (+0.03%) to close at 13025.58


Volume: Volume jumped but it was the result of two aspects. First, the MSCI rebalance required buying and selling to get the proper portfolio mixes. Second, end of month adjustments with the year end coming fast. Thus you cannot put too much stock in the volume jump.

Breadth. Back to a more tame level, matching the market.


THE CHARTS

SP500. Held the move over the 50 day EMA, showing a doji, posting an upside week. Still some serious resistance, however, with the March and April peak and August peak immediately overhead. Up on the week but still a lot of work to do to get past 1428. The overall pattern still looks weak, but thus far the relief bounce has held and indeed extended the move this week.


NASDAQ. Held the Thursday gap through the 2011 up trendline and the 200 day SMA. As with SP500, not overly impressed with the overall pattern, but it has taken over some of the leadership role, it has some big name stocks moving well, and it is not giving up its gains, at least for now. Still has some room to run to 3040ish.


Russell 2000/SP400. Flat on Friday but a nice gap Thursday took the small caps through the downtrend from August. Still a lot of overhead resistance but room to run before it gets there. As with NASDAQ, RUTX started showing some leadership last week.

SP400 midcaps were flat, bumping some serious resistance at 1000 to 1005. That is what it gets for its strong moves. Not bad but likely needs a bit of rest before breaking higher. One of the strongest in the market right now.


SOX. Held the move over the 50 day EMA and that opens the door for some more upside, but SOX is mired deep in it still, even after two weeks upside.


DJ30/DJ20. The Dow is above the 200 day SMA but below the 50 day EMA and some serious resistance at 13,100. It is moving with the other indices, however, so it has held its gains. Really don't like the way it looks; bearish pattern. It is, however, following and not leading . . . up or down.

DJ20. Faded to the 200 day SMA, undercut it, but recovered to hold it on the close. Still a solid run and just took a breather Friday.


Summary: No relative changes Friday. The growth indices took over leadership on the week and remain in the best position to continue. SP500 and DJ30 are very worrisome pattern-wise as they still just look as if they are in a relief move. True, but they continue to hold up and have showed no signs of fading back.


LEADERSHIP

Big names. NASDAQ names performed very well on the week: GOOG and AMZN continued higher Friday, EBAY as well. They are really providing the upside impetus for NASDAQ, but more need to develop and follow.

Financial. Nowhere all week, falling early then rebounding, but all in a narrow range. Nothing spectacular, just held up. If they start to contribute then things do indeed change. BAC was up, C was down. It was basically stock to stock on the session.

Retail. Very interesting week with Same Store Sales. YUM imploded Friday as it said its China sales cooled and would continue. How strong is China??? LULU was solid on the week. ULTA shot to life Friday. WMT enjoyed a great day and week. FDO surged nicely. DG is rallying. Note the shift in retail to the discounters? Never a good sign for the economy, particularly heading into Christmas

Technology. FFIV still bumping the upper side of its channel. CTSH may try a rally. CTXS flopped Friday but is still in its pattern. Chips rallied well on the week, at least some of them (e.g. ONNN). A bit of a test and we may get a shot at some of these next week.

Energy. OII still looks interesting. APC in natural gas is interesting as well. Not causing us to race to the buy button, but worth keeping an eye out. Service companies such as SLB are trying for a rally.

Homebuilders. KBH started to crack. TOL looks a bit heavy. PHM is struggling a bit as well, perhaps forming a right shoulder.

Materials. Still strong: LPX, TREX


THE ECONOMY

TO VIEW THE ECONOMY VIDEO CLICK THE FOLLOWING LINK:
Flash: http://investmenthouse1.com/ihmedia/f/eco/eco.html

Personal Income flat, spending falls, disposable income negative again.

"Float like a butterfly, sting like a bee, your hands can't hit what your eyes can't see."
--Muhammad Ali

"Disposable Income is negative, Personal spending falls, what people don't have they can't spend at the malls."
--Me, 2012


Congress awakens to the shock of budgeting . . .

Same Store Sales were vastly disappointing at less than 2% when 4.5% to 5% gains were expected.

October Spending fell 0.2% when a rise was expected.
Disposable Income: -0.1%

Disposable income fell for the third straight month and third straight negative read. Incomes are heading lower AGAIN after already falling 8.2% on average during the first 3.5 years of the Obama term.

These numbers were a surprise and it was necessary to assign blame. Enter (again) Sandy. That damn storm never seems to end. Never mind it snuck in at the end of October less than 2 days from month's end. Never mind the massive buying to stock up AHEAD of the storm that in reality likely pushed sales HIGHER.

No, the numbers don't jibe with the line that is being sold about a continued economic recovery. Thus it is necessary to find a scapegoat such as the hapless bastard in Ray Bradbury's classic 'Fahrenheit 451' who was minding his own business when the government selected him as the villain they were chasing but had lost track of.



No, we have a problem, and though it is the government's favorite tactic each month to find a reason to blame.

Where did that disposable income come from? Where did it go? Ask cotton-eyed Joe?

Or not. Consider, now after the election, the rather massive revision to disposable income the BEA (Bureau of Economic Analysis) slipped in after the release of the spending and income numbers: $40B in inflation adjusted disposable income was taken off the books for a period spanning March to October.

What would cause that revision? How was it overstated? Good questions, but no answers in the release.

The impact: Besides underscoring what we have been saying about disposable income running out, it takes about 0.25% off of the 2012 GDP calculations. Is this the only revision to come? Are you kidding? In the run up to the election all kinds of bogus numbers were reported. 'Quiet' revisions will be released for months and months that back those phony numbers out of the reports. After all, how else will the post-election economic malaise/recession/depression we are heading for be made to look better than it is? Write down lower what came beforehand for easier comparison!


Chicago PMI recovers back to expansion! But not really according the authors.

Ah Chicago. The Windy City. The city with shoulders. Home of the pig-cicle, at least according to M*A*S*H episode 59, Adam's Ribs.


I've eaten a river of liver Hello, Chicago? Adam's Here come the ribs.
and an ocean of fish! Ribs? I want to place a
takeout order . . .

Chicago . . . . . .

Clearly Chicago is on the mend given it is back above 50 after three months below. Not so fast according to the authors of the report. They are the ones putting the brakes on the good spirits, noting the internals and the trend.

Internals:

Order Backlogs: 49.6 versus 44.3. Better but still contracting.

New Orders: Weakest since 6/2009.

Without new orders production falls and backlogs fall, and Chicago PMI falls back to negative.

Recall back in May I reported that the authors were very worried about the trend of the internals, particularly new orders and order backlogs. They had declined a certain percentage for three months straight, and the survey authors said this is a very clear sign of recession in 6 to 9 months.

We are now 6 months from that prognostication in May. Ah ha many will say, just look at the Q3 GDP revision released Thursday showing 2.7% growth! Yes, but as demonstrated, 1.5 points of that was attributed to government spending and an inventory surge (remember me talking about all of those autos being stuffed down to the dealers? There you go: 36% of the GDP increase was due to inventory build). Business investment fell and consumption tailed off. That leaves 1.2% GDP growth and that likely is written lower. Sure feels like a recession to just about everyone I know. Already talk for Q4 is in the 1.4% range, and that is high. In another three months, particularly if aided by the FCliff, a textbook recession could be here.





THE MARKET

SENTIMENT INDICATORS

VIX: 15.87; +0.81
VXN: 16.96; +0.56
VXO: 16.15; +0.74

Put/Call Ratio (CBOE): 1.16; +0.15


Bulls versus Bears

Bulls: 39.3% versus 37.2% versus 38.3% versus 43.6 versus 41.5% versus 45.7% . Bouncing with some more momentum as the market continued its relief rally. Got closer to 35% but no cigar. Background: Undercut 35%, the threshold for bullishness, in early June. As noted, hit 34% in early June. It did its job and the market is on the rally. Hard drop to 34 from 39.3% as economic reality and a choppy stock market hit. Off the 55+ level hit in late February. That was the highest level since April and May of 2011, the peak of the post-bear market high. 35% is the threshold level suggesting bullishness. To be seriously bearish it needs to get up to the 60% to 65% level.

Bears: 27.7% versus 27.7% versus 28.7% versus 27.7% versus 27.7% versus 25.5%. Wow, just going nowhere, stuck in a rut. On the last run never made it to the 35% that can be a bullish indication, but the bulls were weak enough back in June. Over 35% is the threshold to be really be a good upside indicator. For 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.


MONDAY

Another big week of data from the ISM on Monday to the November Jobs report on Friday. 90K expected for non-farm payrolls and unemployment mysteriously back up to 8.0%. What did I say before about having to backtrack the pre-election numbers?

It is also a new month and that has seen new money enter the market the past four months. Just a day to the upside to start November, but several session rallies before that. Given the indices are on an upside roll, that could bring in some more bucks and extend the move up to that next resistance level that is, as noted above, not that far away.

Of course there is the Cliff. More precisely the debate around the cliff. That is the real action. Going over the cliff is somewhat of an unknown but then again it everyone seems to think it will result in recession.

Certainly they have to be addressed, but the methodology of the 'solution' is not what a republic is all about. Secret negotiations and 'deals' versus airing the problems, outlining the possible solutions, and getting the American citizens' views on each. The current method results in things such as Obamacare and the Sequestration where a few behind closed doors decide our fates. We have enough of that with the Fed; we don't need our elected officials operating in this manner.

Engaging in this kind of 'solution' is a no win for those who play the game. If you fail you are blamed because no ideas were put out in the light and the public did not have a chance to say 'you know, that is not a bad idea.' If you take your case to the public, make your arguments both to the other side and to the US citizenry during open, live, televised meetings, then everyone who cares, and there are many of us, sees all sides and will, yes, see the truth.

If I were the republicans I would insist on open, televised meetings where I would put forth the ideas espoused in Thursday's reports. I would take it to the people and say this is so important we must have everyone's input, kind of like Obama when he was running the first time and talked about healthcare reform on C-SPAN. Yes that happened.

Remember the movie 'Dave' where the press were invited to a cabinet meeting and the Secretary of Transportation, because the meeting was being covered (presumably by an HONEST press) had the cover to drop his rather silly reasons for a program to reassure auto buyers they bought the right car?



Of course the federal government had NO business involving itself in what 'Dave' was trying to get money for, but the point is clear: people tend to do the right thing when they are IN FRONT of the public versus being behind closed doors where they can be, well, asses, and won't get called out for it. We desperately need people to do the right thing. Man do we ever.

Well, that is more hope for change. Reality is another matter. Neither side, ironically, wants to cede that power to the people. They would rather take it in the cogs so to speak than let the public decide the matter.


Reminds me of an old 'King of the Hill' episode.
I know I get mad enough at our leaders to want to engage in some of that sometime . . .

Thus we are subject to the ebb and flow, staged or not, of the 'negotiations.' Again, Boehner let slip the 'framework' comment Friday even as he was complaining of going nowhere. Thus there is the very likely and very sad prospect of a deal to raise about $999B in revenues (republicans won't agree to anything with a 'T' after it) through marginal increases and/or closing the deductions many people rely upon, not to mention charitable deductions. After all, if the government is to provide everything, why do you need charities? It won't have anything but token cuts with perhaps a small percentage of budget cuts across the board. Nothing done to social security, and any Medicare cuts will be those the Democrats said they should get credit for and a few token ones in addition to the republicans can point to what a great job they did wresting more from the other side.

In the end, of course, the problem will remain and will not be resolved. Another downgrade is quite likely after the effeminate cuts are made. It won't prevent a recession, it won't spur growth. Then we have a worse problem a year later.

As for next week, however, we don't like the SP500 and DJ30 patterns. But, the indices have rallied nonetheless; those hope and buy rallies can last a while as we know, particularly when the Fed has the money bags out again.

Thus we will look for more upside though a lot of stocks are not in buy positions given a two week rally has some extended and others simply rebounded from ugly selloffs and are in no kind of pattern to buy.

We will also have some downside at the ready, however, because we don't like the SP500 and DJ30 patterns. NASDAQ isn't all that heartwarming either. So we will be ready in the event the rally runs dry. Remember, we said this was a relief rally until it proved otherwise. The patterns on the large cap indices suggest it is still just a relief rally at this point. The small and midcaps suggest it may be something else, but neither has taken the definitive lead yet.

Thus we let our upside work for us. We did bank some very nice upside gain on the week and if the move continues, there will be a lot more to cash in. It was somewhat ironic that Friday we banked some nice downside gain even after two weeks of upside: it is clear not all of the market is racing upside. Still, until the rally falters and reverse, we let some really nice upside positions run.

If things break they could turn rather quickly. Such is the nature of negotiations and credit markets getting stretched to the breaking point. Some very smart investors are very worried right now. But, it has not paid to invest with your emotions on this move, that is why we said over a week ago, better check them at the door.

Have a great weekend!



Support and resistance

NASDAQ: Closed at 3012.03

Resistance:
3024 is the gap point from early May
3026 from 10/2000 low
3042 from 5/2000 low and several other price points
3076 is the late April 2012 high
3090 is the mid-March interim high
3037 is the October low
3101 is the August 2012 high
3134 is the March 2012 post-bear market peak
3171 is the October intraday high
3197 is the September 2012 post-bear market high
3227 is the April 2000 intraday low
3401 is the May 2000 closing low

Support:
3000 is the February 2012 post-bear market high
2999 is the bottom of the August 2012 consolidation
2997 is the up trendline from 2011
The 50 day EMA at 2992
2988 is the July 2012 high
The 200 day SMA at 2986
2977 to 2980 is the bottom of the late October 2012 consolidation
2962 is the April 2012 low
2950 is the mid-April closing low
2942 is the mid-June 2012 high
2900 is the March 2012 intraday low
2858 is the late July 2011 peak
2847 is the mid-May 2012 low
2838 from the July 2012 lows
2778 from the May 2012 low and June 2012 gap point.
2747 is June 2012 closing low
2726 IS June 2012 intraday low


S&P 500: Closed at 1415.95

Resistance:
1422.38 is the prior post-bear market high (March 2012)
1425 from May 2008 closing highs and the October 2012 low
1427 is the August 2012 peak
1434 from early November 2012
1433 from August 2007 closing lows
1440 from November 2007 closing lows
1464 is the June up trendline
1463 is the September closing high
1466 is the September closing high
1471 is the October 2012 intraday high
1475 is the September 2012 high
1499 from January 2008
1539 from June 2007

Support:
The 50 day EMA at 1408
1408 is the late October range closing low
1406 is the early May 2012 peak
1402.22 is the closing low of the August 2012 lateral consolidation
The 200 day SMA at 1384
1378 is the February 2012 peak
1375 is the early July 2012 peak
1371 is the May 2011 peak, the post-bear market high
1363.46 is June 2012 high
1359 is the April 2012 low
1357 is the July 2011 peak
1344 is the February 2011 peak
1340 is the early April 2011 peak
1332 is the early March 2011 peak
1325 is the July 2012 intraday low
1309 is the right shoulder low from June 2012
1295 to 1294 is the April 2011 low and the February 2011 consolidation low (bottom of the trading range)
1293 is the October 2011 peak
1275 is the January 2010 low, early January 2011 peak
1267 is the December 2011 peak
1266 is the June 2012 base low


Dow: Closed at 13,021.82

Resistance:
13,056 is the February 2012 high
13,058 from the May 2008 peak on that bounce in the selling
The 50 day EMA at 13,067
13,297 is the April 2012, prior post bear market high
13,300 to 13,331 is the August 2012 post-bear market high
13,653 is the September 2012 high
13662 is the October 2012 intraday high
13,668 from 12-2007 peak
13,692 from 6-2007 peak
14,022 from 7-07 peak

Support:
The 200 day SMA at 12,994
12,716 is the April 2012 closing low
12,524 is a range of support from early 2012 and summertime 2012
12,391 is the February 2011 peak
12,369 is the left shoulder low from May 2012
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
12,035 is the June 2012 base low
The June 2011 low at 11,897 (closing)
11,734 from 11-98 peak
11,717 is the late August 2011 peak



Economic Calendar

November 27 - Tuesday
Durable Orders, October (8:30): 0.0% actual versus -0.4% expected, 9.2% prior (revised from 9.8%)
Durable Orders -ex T, October (8:30): 1.5% actual versus -0.4% expected, 1.7% prior (revised from 2.0%)
Case-Shiller 20-city, September (9:00): 3.0% actual versus 3.1% expected, 2.0% prior
Consumer Confidence, November (10:00): 73.7 actual versus 73.0 expected, 73.1 prior (revised from 72.2)
FHFA Housing Price I, September (10:00): 0.2% actual versus 0.5% prior (revised from 0.7%)

November 28 - Wednesday
MBA Mortgage Index, 11/24 (7:00): -0.9% actual versus -2.2% prior
New Home Sales, October (10:00): 368K actual versus 388K expected, 369K prior (revised from 389K)
Crude Inventories, 11/24 (10:30): -0.347M actual versus -1.466M prior

November 29 - Thursday
Initial Claims, 11/24 (8:30): 393K actual versus 395K expected, 416K prior (revised from 410K)
Continuing Claims, 11/17 (8:30): 3287K actual versus 3325K expected, 3357K prior (revised from 3337K)
GDP - Second Estimate, Q3 (8:30): 2.7% actual versus 2.8% expected, 2.0% prior
GDP Deflator - Second Estimate, Q3 (8:30): 2.7% actual versus 2.8% expected, 2.8% prior
Pending Home Sales, October (10:00): 5.2% actual versus 1.0% expected, 0.3% prior

November 30 - Friday
Personal Income, October (8:30): 0.0% actual versus 0.2% expected, 0.4% prior
Personal Spending, October (8:30): -0.2% actual versus 0.1% expected, 0.8% prior
PCE Prices - Core, October (8:30): 0.1% actual versus 0.2% expected, 0.1% prior
Chicago PMI, November (9:45): 50.4 actual versus 50.7 expected, 49.9 prior


December 3 - Monday
ISM Index, November (10:00): 51.2 expected, 51.7 prior
Construction Spending, October (10:00): 0.4% expected, 0.6% prior
Auto Sales, November (14:00): 5.2M prior
Truck Sales, November (14:00): 6.0M prior

December 5 - Wednesday
MBA Mortgage Index, 12/01 (7:00): -0.9% prior
ADP Employment Change, November (8:15): 125K expected, 158K prior
Productivity-Rev., Q3 (8:30): 2.7% expected, 1.9% prior
Unit Labor Costs -Revised, Q3 (8:30): -0.8% expected, -0.1% prior
Factory Orders, October (10:00): -0.1% expected, 4.8% prior
ISM Services, November (10:00): 53.7 expected, 54.2 prior
Crude Inventories, 12/01 (10:30): -0.347M prior

December 6 - Thursday
Challenger Job Cuts, November (7:30): 11.6% prior
Initial Claims, 12/1 (8:30): 382K expected, 393K prior
Continuing Claims, 11/24 (8:30): 3275K expected, 3287K prior

December 7 - Friday
Nonfarm Payrolls, November (8:30): 90K expected, 171K prior
Nonfarm Private Payrolls, November (8:30): 120K expected, 184K prior
Unemployment Rate, November (8:30): 8.0% expected, 7.9% prior
Hourly Earnings, November (8:30): 0.1% expected, 0.0% prior
Average Workweek, November (8:30): 34.4 expected, 34.4 prior
Michigan Sentiment, December (9:55): 82.4 expected, 82.7 prior
Consumer Credit, October (15:00): $9.9B expected, $11.4B 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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