Sunday, December 30, 2012

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

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