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.
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.
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.
Have a great weekend!
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 - A 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 - Wednesday - 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
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