30 Nov
Daily Market Commentary

Stocks End Week & Month Higher

Long-Term Look At The US Stock Market

Friday, November 30, 2012
Stock Market Commentary:

The major averages ended higher in November and, as of this writing, have placed a near term low on Friday, November 16, 2012 (Day 1 of current rally attempt) after politicians hinted that a deal would get done for the fiscal cliff. If November’s lows (SPX 1343) are taken out, then odds favor lower, not higher prices, will follow and this rally attempt will have failed. Additionally, a new rally will be confirmed when we see at least one of the major averages rally at least 1.4% on heavier volume than the prior session. Keep in mind that the path of least resistance is down until the major averages confirm their latest rally attempt and break above resistance (50 DMA line) and their downward trendlines. For those of you that are interested, Friday marked Day 10 of a New Rally Attempt which means that the window is now open for this rally attempt to be confirmed with a new follow-through day.

Monday-Wednesday’s Action: Fiscal Cliff Drama Dominates The Headlines

Stocks opened lower on Cyber Monday even though initial data suggested that Black Friday sales were slightly higher than last year. Amazon.com (AMZN) enjoyed the most traffic over the weekend which helped it capture a large block of the holiday shopping season. The National Retail Foundation said total spending over the Thanksgiving weekend rose to $59.1B which was 16% higher than last year’s total. Stocks fell in Europe after eurozone finance ministers met to discuss austerity measures for Greece. If the measures are met, Greece will receive the next tranche of the bailout on December 5, 2012.
Stocks fell on Tuesday after Senate Majority Leader Harry Reid said he is “disappointed with the little progress made” regarding the fiscal cliff debt talks. Investors reacted poorly to this news and a slew of stocks, particularly financials, fell on the news. Economic data was mixed, the closely followed S&P/Case-Shiller home price index rose for a 6th consecutive month and the Conference Board said consumer confidence jumped to the highest level in 4.5 years in November. Meanwhile, the Commerce Department said durable goods were flat in October.
Stocks opened lower but closed higher on Wednesday after politicians reiterated their desire to reach a deal on the Fiscal Cliff. The benchmark S&P 500 index bounced perfectly off its 200 DMA line (encouraging sign) and closed near its highs. Economic data was mixed. President Obama said he is hopeful that a deal will be reached before Christmas. The Federal Reserve released its October Beige Book, which showed modest growth in seven Districts. The report also showed two Districts reported stronger growth while Boston, New York, and Philadelphia saw weak performance. The weakness in New York and Philadelphia was due to Superstorm Sandy. New home sales disappointed investors. New homes sales came in a 368,000 annual rate which missed estimates by 19k.

Thursday & Friday’s Action: Fiscal Cliff Drama Continues

Stocks edged higher on Thursday after GDP rose 2.7% in Q3 which topped the initial estimate of 2.0%. Jobless claims fell to 393k which was near the estimate of 390k. Pending home sales jumped +5.2% even with the impact of Sandy which topped estimates for a gain of 1%. Pending home sales track sales of existing homes, not new homes, that have not yet closed (it normally takes 4-6 weeks for a pending contract to close). Stocks were quiet on Friday as investors digested the latest round of economic data. U.S. consumer spending fell -0.2% in October which marked the first decline sicne May. Personal incomes were flat which missed the Street’s estimate for a +02% gain.  Sandy adversely affected the data. The Chicago Manufacturing index came in at 50.4 in November vs 49.9 in October. Overseas, Germany approved a bailout for  Greece which helped the Euro rally.

Market Outlook: Downtrend

From our perspective, the market is in a clear downtrend and it is encouraging to see that the major averages are down less than 10% from their 2012 highs. On October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19.  Since then, stocks have gone straight down and a lot of technical damage has occurred. We will turn more bullish once the major averages confirm a new rally attempt and then trade back above their respective down trendlines and 50 DMA lines.  As always, keep your losses small and never argue with the tape.  

23 Nov
Best Trading Tips

Chart Reading- Basic Concepts


Here are some simple rules of chart reading that I think anyone analyzing charts should keep in mind.
Prices That Fall in to Support Will Bounce at Support
Support and resistance are important concepts of chart analysis. Support is a floor price that has been formed by the market over time, it is a low price point where the price trend stopped going down and started to go up. Chart readers look for breaks through support as a signal that a down trend is beginning.
However, that is not always the case. If a stock’s price is falling day after day, it is likely to bounce around support but it may go through support temporarily. Therefore, don’t short breaks through support if the break comes after a number of days of downward price movement. Prices in free fall will usually bounce around support.
Prices that Consolidate Before Breaking Support Will Trend Lower
Here is how to apply the sell on a break of support rule. If prices are trending sideways with relatively low volatility at or near an area of price support and then make a downward move through support, the stock is likely going in to a downward trend. The difference here is that the downtrend is just starting with an initial break through support.
You can reverse these rules for resistance and upside breakouts as well.
Breakouts From Low Price Volatility are Reliable
What does it mean when stocks trend sideways with very little price volatility? It is more than just a boring chart, it means that buyers and sellers agree about what the stock is worth. It is a display of confidence in the value given to the stock.
Therefore, if the stock price breaks from this period of confidence, it implies that there is new information that justifies the price move. This usually comes in the early stages of a trend; as more investors learn about the new information, more people will jump in to the stock and carry it farther along its trend.
This means that identifying breaks from low price volatility is an important way to catch market beating trends early.
Prices That Run Away From the Trend Line Come Back to the Trendline
In the long term, prices tend to trend in a linear fashion. That means you can draw a straight line across the bottoms of an up trend or a straight line across the tops of a down trend.
However, along the way, prices will often move away from this straight line. This happens because investors get emotional and either chase the stock higher with greed or force the stock quickly lower with fear.
The emotion eventually comes out of the market, bringing the stock back to that linear, straight trend line.
This means that we should be aware of a short term price reversal the farther prices get from the linear trend line. A stock that runs away to the upside will eventually come down on a pull back. Prices that fall too quickly will eventually come up.
This rule works best with up trends, which tend to be more orderly and longer lasting than down trends.
All Available Information Is Shown In the Chart
Traditional investors who have heard me talk about the markets often shake their heads when they hear that I do not do any research in to what the company does before I buy a stock. They find it hard to believe that I can make money trading nothing more than the chart.
The chart of price change shows us every bit of fundamental information that is known by the market. Since most investors are acting on information to make their decisions, reading a chart is essentially reading their perceptions of the information that they have. A company that is doing well within their business will have a good looking chart because investors are pricing in the positive new information.
Falling Tops Are a Sign That Investors are Pessimistic
If investors believe that there is something wrong with a company’s ability to make money in the future, they will drive prices lower over time. This pessimism is best seen visually in a chart by looking for falling tops. The falling tops on the chart show that every time the buyers are able to push prices up, they are unable to push prices as high as they had the previous time. That is a sign that the sellers are in control of the market.
Rising Bottoms Are a Sign That Investors are Optimistic
Conversely, if the bottoms are rising on the chart, investors are optimistic and the buyers are in control. Each time the sellers are able to push prices down, they are unable to push them down as much as they had the previous time.
It is best to only buy stocks that are in the buyers’ control.
Up Trends Start Slowly
A stock that has been an under or non-performer will have investor’s doubt any time it shows some strength. Investors tend to judge a stock by what has happened in the past rather than what they expect for the future. The result is that stocks that are starting upward trends tend to do so slowly because investors doubt that the company deserves to go higher.
This means you have to be patient with up trends that are in their early stages as they will often have false starts. Doubting investors who own the stock will sell in to strength, not realizing that the company’s future is brighter than it has been.

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Source: Stockscores.com Perspectives for the week ending May 19, 2012

23 Nov
Media Quotes

Adam Sarhan Reuters & CNBC.com Quote: Gold Settles Above $1,750 as Dollar Drop Sparks Rally

Reuters


Published: Friday, 23 Nov 2012 | 2:34 PM ET
Gold futures settled above $1,750 an ounce for the first time in more than a month on Friday, gaining as dollar weakness and options-related buying triggered a technical breakout.
After trading slightly higher in early U.S. dealings, gold surged suddenly to above its 50-day moving average, a key technical resistance the metal had failed to breach in more than a month.
Analysts said Friday’s gains could set up for a rally above the more formidable $1,800 level, which bullion has not seen since its rise to a record $1,920.30 in September 2011.
“It’s definitely a technical breakout above the 50-day moving average for the short term. If we break above $1,800, the next real significant resistance will be the prior all-time high near $1,900,” said Adam Sarhan, CEO of Sarhan Capital.
Markets could be choppier than usual in thin trading on Friday, with the CME metal markets closing early and the U.S. stock market open for only a half day of business due to the U.S. Thanksgiving holiday on Thursday.
Bullion also benefited from the dollar falling 1 percent due to the euro’s strength on hopes for a Greek aid package and to a surprise improvement in German business sentiment.
Spot gold [XAU=  1752.50  —  UNCH    ] was up 1.4 percent at $1,752 an ounce.
U.S. gold futures [GCCV1  1751.40    23.20  (+1.34%)   ] settled up $23.20 an ounce at $1,751.40 in heavy trading. The first-notice day for December is next Friday.
Strong buying related to next Tuesday’s expiration of the popular December COMEX options also lifted gold. Heavy positioning of the $1,750 and $1,800 strikes in call options could increase volatility and lift prices, traders said.
Gold outperformed other commodities, which also benefited from a weaker dollar. The U.S. dollar index is down 1 percent and on track for its first weekly decline in five weeks.
“The dollar here is just getting smacked so hard in a really thin market, so it’s easy for gold and silver to break out of some key levels without a lot of resistance,” said Matthew Schilling, commodities broker at futures brokerage RJ O’Brien.
“It’s a dollar play today,” he said.
Among other precious metals, silver [XAG=  34.10  —  UNCH    ] last rose 2.5 percent to $34 an ounce. Platinum [XPT=  1614.70  —  UNCH    ] was up 2.2 percent at about $1,614 an ounce, while palladium [XPD=  662.00  —  UNCH    ]gained 1.2 percent to about $662 an ounce.
URL: http://www.cnbc.com/id/49935015

23 Nov
Media Quotes

Adam Sarhan Reuters Quote: COMMODITIES-Greek hope, German data boost index to 1-month high

Reuters


Fri Nov 23, 2012 3:13pm EST

* Gold up 1.4 percent to lead commodities higher
* CRB index up 0.5 percent to one-month high
Nov 23 (Reuters) – Commodity markets rose to their highest in a month on Friday as signs of progress in Greek aid talks and upbeat German economic data pressured the U.S. dollar and elevated raw materials.
In a post-Thanksgiving trading session marked by early closes and moribund volumes, gold set the pace for the broad-based rally with a 1.4 percent jump — aided by a technical breakthrough and options dealing — while oil and grains saw modest gains, supported by fundamental factors.
The Thomson Reuters-Jefferies CRB index, a global commoditiesbenchmark, climbed 0.5 percent to its highest close since Oct. 23. It gained 1.9 percent over the week, the best weekly performance since mid-September. The index had slumped nearly 10 percent in the two months until early November.
Macro-economic factors were in focus through Friday’s thin session, withGreece saying the International Monetary Fund had relaxed its debt-cutting target for the country, suggesting lenders were closer to a deal for a vital aid tranche to be paid. But other sources involved in the talks cautioned that the funding gap was far bigger than Greece has suggested.
Officials who failed earlier this week to agree on how to curb Greece’s debt will make a third attempt at resolving the issue on Monday.
A day after downbeat EU manufacturing data depressed market sentiment, the Munich-based Ifo think tank said its business climate index rose for the first time in seven months for November, far surpassing even the highest forecasts.
“It looks like there’s some strength in the oil market today on the back of high hopes on a stronger (European Union),” said Carl Larry, president of Oil Outlooks and Opinions LLC.
The U.S. dollar index fell 0.9 percent as the euro gained, while U.S. stock markets gained more than 1 percent before their early midday close.
In oil markets, where trading volumes were about one-third of normal, U.S. crude outpaced European Brent after news of a spill that briefly shut Enbridge’s 318,000 barrel per day Line 14 near Mokena, Illinois, earlier in the week.
Traders were also keeping a close eye on the fragile two-day truce between Israel and Palestinians, after the hostilities sent Brent prices to one-month highs earlier this week.
Benchmark Brent settled 83 cents higher at $111.38 a barrel, while U.S. crude closed at $88.28 a barrel, up 90 cents from Wednesday’s settlement.
Gold rose $23.45 to $1,752.50 an ounce, punching above the 50-day moving average that had capped the market for the past month.
“It’s definitely a technical breakout above the 50-day moving average for the short term. If we break above $1,800, the next real significant resistance will be the prior all-time high near $1,900,” said Adam Sarhan, CEO of Sarhan Capital.
Silver streaked 2.5 percent higher to $34.10 an ounce, its highest in six weeks. It has gained more than 10 percent since early November as traders bet on further stimulus.
Grain markets saw limited gains, aided in part by data showing weekly corn and wheat export sales were higher than analysts had expected. Cocoa futures climbed to a one-month high, but coffee and sugar fell by nearly 2 percent as hefty supplies kept prices pinned near their lowest in years.
URL: http://www.reuters.com/article/2012/11/23/markets-commodities-idUSL1E8MN4P820121123

23 Nov
Daily Market Commentary

Stocks Rally On Shortened Holiday Week

Long-Term Look At The US Stock Market

Friday, November 23, 2012
Stock Market Commentary:

The major averages rallied during the shortened holiday week as optimism spread that the Fiscal Cliff will be resolved. Technically, the market is simply bouncing from egregiously oversold levels as the major averages still remain in the middle of their 10-week well defined downtrends. Friday marked Day 5 of a New Rally Attempt which means that the window is now open for this rally attempt to be confirmed with a new follow-through day. All we need to see at least one of the major averages rally at least 1.4% on heavier volume than the prior session. If November’s lows are taken out, then odds favor lower, not higher prices, will follow and the day count will be reset. The path of least resistance is down until the major averages confirm their latest rally attempt and break above resistance and their downward trendlines.

Stocks Bounce From Oversold Levels

Stocks soared on Monday as hope spread that the fiscal cliff will be resolved and the tensions in Europe and the Middle East will ease in the near future. Enthusiasm spread after leaders from both sides of the aisle expressed confidence that a deal would be reached before Christmas and Obama said he is “confident” that leaders would deal with the fiscal issues. European stocks rallied after Eurozone finance ministers gave preliminary approval for Greece to get an additional disbursement of 44B euros in emergency aid by Dec 5, assuming the debt-laden nation meets its remaining conditions for the loan.
In the U.S., the National Association of Realtors said existing home sales jumped by +2.1% in October to a seasonally adjusted rate of 4.79M units. This topped the Street’s estimate for a gain of 4.75M units and bodes well for the ongoing housing recovery. The NAHB/Wells Fargo Housing Market Index, which measures sentiment among home builders, rose for the seventh consecutive month and hit its highest level in November.
Stocks opened lower but closed higher (healthy sign) on Tuesday as stocks digested some of the prior session’s strong gains. Housing starts jumped to an annualized rate of 894,000 units during October which topped the Street’s estimate for 840,00 and continues to trend in higher. Building permits missed estimates and slid to 866k from 890k in October. A slew of housing stocks surged on the news because nearly all the housing data continues to show signs of improvement. After Tuesday’s close, Moody’s, one of the popular rating agencies, cut France’s debt rating one notch from AAA to AA1. Interestingly, the euro shrugged off the downgrade and ended the week higher.
Stocks were relatively flat on Wednesday which was the last full trading day of the week. EZ officials approved the last tranche of aid to Greece which helped the euro edge higher and allowed eurozone officials to kick their debt-laden can further down the road. A cease-fire was called between Isreal and Hamas which helped ease concerns. U.S. economic data was mixed. The Labor Department said weekly jobless claims matched estimates for 410,000 new claims, and were elevated for the second straight week due to distortions from Sandy. The Thomson Reuters/University of Michigan consumer sentiment index missed estimates but still ticked higher to 82.7 compared to October’s reading. Elsewhere, the Conference Board’s Leading Economic Index for edged higher by 0.2% in October which matched estimates. The latest read on U.S. manufacturing topped estimates and grew at its fastest pace in five months which bodes well for the broader economy. Markit’s U.S. “flash” manufacturing PMI rose to 52.4 which also topped the boom/bust level of 50. The stock market was closed on Thursday in observance of Thanksgiving. Stocks closed early on Black Friday as initial projects suggest retail sales were higher than last year.

Market Outlook: Downtrend

From our perspective, the market is in a clear downtrend and has now entered correction territory as the major averages continue to fall. On October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19.  Since then, stocks have gone straight down and a lot of technical damage has occurred. We will turn more bullish once the major averages confirm a new rally attempt and then trade back above their respective down trendlines and 50 DMA lines.  As always, keep your losses small and never argue with the tape.  

16 Nov
Daily Market Commentary

Stocks Officially Enter Correction Territory

SPX Day 1 Of a New Rally Attempt


Friday, November 16, 2012
Stock Market Commentary:

The major averages ended the week lower as they continue tracing out their 9-week downtrend (series of lower highs and lower lows) helping the bears remain in clear control of this market. It is important to note that the market is “oversold” and due for a bounce. Keep in mind that oversold markets can get a lot more oversold before they bounce. Friday marked Day 1 of a New Rally Attempt which means that the earliest a possible follow-through day could occur, to confirm this rally attempt, will be Wednesday, providing that Friday’s lows are not breached. If the lows are taken out, then odds favor lower, not higher prices, will follow and the day count will be reset. The path of least resistance is down until the major averages confirm their latest rally attempt. The pullback has now officially turned into a correction evidenced by the fact that several major averages are now more than 10% below their recent highs. So far, the reaction to earnings has been outright awful which suggests investors are not happy with the results or the implications for the future. To be clear, we expect a solution to the fiscal cliff and most likely stocks will rally on that news. If they don’t, that will be extremely bearish. Once that rally occurs we can analyze the rally but shall remain patient to see if a new uptrend emerges or if the stubborn two month downtrend continues.

Monday-Wednesday’s Action- Weakness Begets Weakness

On Monday, stocks opened higher but quickly turned negative as investors continued to wait for Washington D.C. to resolve the looming fiscal cliff. News from overseas was mixed to slightly better than expected. Japan said its economy contracted by -0.9% in Q3  which sparked concern that the Japanese economy will join Europe and fall into a recession in the near future. Meanwhile, China said its trade surplus topped estimates in October which was a welcomed sign. Concerns from Europe eased a bit after Greece approved its 2013 budget which was the next step for the debt-laden country to receive the next round of bailout funds. The big headline in the US occurred after Jefferies Group (JEF) agreed to be acquired by Leucadia National (LUK) for $3.7 billion. Leucadia National is a smaller version of Warren Buffett’s Berkshire Hathaway Inc (BRKA) and nicknamed “Baby Berkshire.”

Stocks opened lower but closed higher on Tuesday as optimism spread that the Fiscal Cliff will be resolved sooner rather than later. Overnight, futures were down sharply after concern spread regarding Greece’s ability to meet its debt obligations and Germany’s economy edged lower. The German ZEW economic expectations index missed estimates (for a decline of -10) and fell -15.7 in November which was worse than October’s already low reading of -11.5. Germany is the strongest economy in Europe and any weakness from them bodes poorly for the Eurozone’s ability to get out of its recession and return to growth. In other news, Christine Lagarde, Managing Director of the IMF and Jean-Claude Juncker, Chair of the Eurogroup, disagreed publicly over the deadline for Greece to lower its debt levels.
Stocks fell hard on Wednesday after President Obama held his first press conference since the election and made it clear that he wants to resolve the fiscal cliff but I felt there was not enough “urgency” in his stance. That said, I do feel as we get closer to the deadline D.C. will put together a last minute solution of some kind. Until then, uncertainty reigns supreme. October retail sales fell by -0.3% which just missed the Street’s estimate for -0.2% decline. The producer price index slid by -0.2% which was lower than the Street’s estimate for a gain of 0.1%. This bodes well for anyone that is concerned about inflation. Finally, the FOMC released the minutes of their latest meeting which showed continued concern regarding US economic growth and the jobs market.

Thursday & Friday’s Action- Stocks Continue To Slide

Before Thursday’s open, the Labor Department said weekly initial jobless claims soared to 439k which was sharply higher than the Street’s expectation for 388k. The sharp increase was due to Superstorm Sandy. The Consumer price index rose by +0.1% which matched estimates. The Empire Manufacturing Survey fell to -5.2 in November which was slightly better than October’s reading of -6.2. The Philly Fed Factory index fell to -10.7 in November which missed estimates and was lower than October’s reading of 5.7. A report from Europe showed that the eurozone fell into a second recession in three years. Stocks ended higher on Friday as investors were hopeful that D.C. will resolve the Fiscal Cliff before the deadline.

Market Outlook- Downtrend:

From our perspective, the market is in a clear downtrend and has now entered correction territory as the major averages continue to fall. On October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19.  Since then, stocks have gone straight down and a lot of technical damage has occurred. We will turn more bullish once the major averages confirm a new rally attempt and then trade back above their respective down trendlines and 50 DMA lines.  As always, keep your losses small and never argue with the tape. 

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14 Nov
Best Trading Tips, Top 10 Lists

10 Ways To Control Your Emotions On Wall Street

Emotions


Fear and greed drive investor decisions in destructive ways. People want to buy stocks that have been going up for some time because their market performance gives legitimacy to the story. A stock that is falling sharply brings out sellers eager to get out because of their fear that the stock will go lower.
You have to know the difference between a strong stock that is going higher and one that is near its top. Stocks that are falling can be sold before the fall farther, but at a certain point they get so low that they are worth considering. We have to learn to overcome our emotions so that we can buy stocks that are starting to go up and sell stocks when they start to go down.
Here are 10 things you can do to overcome your emotions and become a better investor:
1. Use Strategies that Work
Your approach to the market won’t have a hope if your analysis methods are not effective. There are many ways to analyze stocks, take one that you like and test it until you have confidence that it works.
2. Write a Trading Plan
Success has a better chance of happening when you write down a plan to get there. Make your plan include your rules for entry and exit, risk tolerances and a process for review. Adapt your plan over time as you find better ways to achieve success.
3. Manage Risk
Understand the risk in every trade you make and don’t take risks that you can not tolerate. If your exposure to loss is more than you are comfortable with you will inevitably break your discipline.
4. Limit Losses
You should always know where the exit door is in case something goes wrong. When you buy a stock, decide the point where the market will have proven your decision to enter wrong. If the stock falls to that price, get out. Don’t let small losses grow in to big losses.
5. Blame Yourself
There may be a good argument for why a loss you have suffered is someone else’s fault. The newsletter writer could have been wrong, the media could have been wrong, the government could have gone back on a promise, the company could be corrupt. Blaming others will never get your money back. You will not change the actions of others, you can only change your own. Therefore, blame yourself for everything that happens with your money and take steps to make it better.
6. Stop Falling in Love
The more you know about a company, the more likely you are to ignore the market’s message. Companies want you to own their stock; the more investors that they get to own their stock, the higher the price goes. As a result, there is a bias to the information that you are exposed to, if you listen too much you may miss activity in the market that is telling you that something is wrong.
7. Practice Patience
Up trends start slowly so you have to be patient when stocks are trying to start a long term trend. The profit is in the patience, hold on to strong stocks so long as they are showing strength. When looking at a company, avoid a short term outlook that can mislead you about the long term trend.
8. See the Other Side of the Story
Everything you know about a stock may tell you to buy it and you may do so with complete commitment. But, always ask yourself, “Why is someone willing to sell to me at this price.” If you understand their motivations for selling versus your motivations for buying, you can better determine who is right. Without an understanding of the other side of the trade you can not determine whether the other side is wrong.
9. Avoid the Herd
The crowd usually loses. When buying, look around at your fellow buyers. Are they well informed, smart investors or are they generally uninformed people watching 60 Minutes? Always try to be one step ahead of the herd.
10. Analyze Your Results
The market is always evolving, making constant evolution in your approach to the markets important. On a regular basis, analyze your trades and looks for patterns of self destruction. Make changes as necessary.
Source: Stockscores.com Perspectives for the week ending May 4, 2012
 

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12 Nov
Media Quotes

Adam Sarhan CNBC.com Quote: Gold Falls as Euro-Zone Worries Trigger Selling

CNBC

Published: Monday, 12 Nov 2012 | 5:52 PM ET
Gold moved lower on Monday as a lack of an agreement by euro zone governments to disburse more money to Greece prompted bullion investors to sell and take profits.
The metal on Monday largely tracked lower with riskier assets such as the euro after euro zone finance ministers gave Athens two more years to make the budget deficit cuts they demanded.
A steadier Wall Street, amid better economic sentiment following last week’s over 2 percent drop in S&P 500 index, lessened safe-haven demand in gold, analysts said.
“Healthy economic data in the short term will be negative for risk-on markets as it reduces the urgency for global central banks to continue their ‘easy money’ stance,” said Adam Sarhan, CEO of Sarhan Capital.
Spot gold [XAU=  1723.50     -4.24  (-0.25%)   ] edged down 0.2 percent to $1,727.39, within reach to a three-week high around $1,738 struck on Friday.
Flight-to-quality buying lifted gold 3.2 percent last week, its biggest weekly rise since late August.
Global markets have turned their focus from the election to the U.S. “fiscal cliff,” a combination of government spending cuts and tax increases due to be implemented under existing law in early 2013.
Gold would benefit from the government spending cuts and tax increases as a U.S. fiscal crisis could send the economy back into recession, economists say.
An encouraging U.S. nonfarm payrolls report earlier this month had erased all of gold’s gains, gains that followed the Federal Reserve in September announcing it would keep buying mortgage-backed securities until the job market dramatically improves.
U.S. gold futures [GCCV1  1723.00     -7.90  (-0.46%)   ] settled unchanged at $1,730.90 an ounce.
Trading volume was lower than usual, 30 percent below its 250-day average, as the U.S. bond market was closed for the U.S. Veteran’s Day holiday and as the Hindu festival of Diwali began in India.
Silver [XAG=  32.26     -0.13  (-0.4%)   ] dropped 0.6 percent to $32.38 an ounce.
In metals exchange news, the president of the Shanghai Gold Exchange told Reuters at the London Bullion Marketing Association (LBMA) conference that the bourse would launch an interbank market early next month that would start with spot contracts and gradually offer forward contracts.
Among platinum group metals, platinum [XPT=  1553.50     -6.74  (-0.43%)   ] rose 0.5 percent to $1,558.10 an ounce, while palladium [XPD=  601.40     -3.57  (-0.59%)   ] inched down 12 cents at $603.80 an ounce.
PGM traders will closely watch an industry report on Tuesday by platinum refiner Johnson Matthey which will shed light on whether reduced supply due to mine labor violence in top producer South Africa might turn the market into a deficit this year.
URL: http://www.cnbc.com/id/49783601
09 Nov
Media Quotes

Adam Sarhan Reuters Quote: Wall St Week Ahead: 'Fiscal cliff' blues may lead to correction

Reuters

By Caroline Valetkevitch and Ryan Vlastelica
NEW YORK | Fri Nov 9, 2012 7:21pm EST

Nov 9 (Reuters) – Wall Street’s post-election sell-off may gather steam in the coming weeks as worries mount about the looming “fiscal cliff” and technical weakness suggests a possible correction ahead.
The benchmark Standard & Poor’s 500 closed below its 200-day moving average – a measure of the market’s long-term trend – on Thursday for the first time in five months, and ended below it again on Friday. More than half of the Dow components are trading below key technical levels.
“I don’t think you have to panic here, but I think you really want to be looking for the market to move lower for the next couple of months,” said Frank Gretz, market analyst and technician for Wellington Shields & Co., a brokerage in New York. “I think the next rally is the rally you want to sell.”
At the heart of the market’s worry is whether U.S. leaders can come to agreement on some $600 billion in spending cuts and tax increases that are due to kick in early next year. Some fear dramatic cutbacks could send the U.S. economy into another recession.
The prospect of higher tax rates in 2013 is driving investors to sell shares as they seek to decrease the tax impact from their positions this year and next.
“You would have thought the fiscal cliff scenarios would have been already mulled over and priced in, but they weren’t. It’s almost like the market has ADD -attention deficit disorder- and can only focus on one thing at a time,” said Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, whose firm manages about $13 billion in assets.
The S&P 500 fell 2.4 percent for the week, its worst weekly percentage drop since June. The index is now down 6.4 percent from its intraday high for the year of 1,474.51 reached on Sept. 14. That drop puts the benchmark index below its 50-day moving average, but not yet into correction territory, defined as a 10 percent drop from a peak.
READING THE TECHNICAL SIGNS
The S&P 500 has been trading in a range between the 50-day moving average of 1,433.50 and the 200-day moving average of 1,380.98 for about two weeks. A significant break below that lower level could be a precursor to further weakness, analysts said.
“There’s a technical breakdown in the market that indicates further losses,” said Adam Sarhan, chief executive of Sarhan Capital in New York. “A 10 percent drop is the next big line in the sand.”
The primary driver of stock prices in coming weeks looks likely to be investor concern about the U.S. fiscal situation.
In a sign of the risks involved, comments by President Barack Obama on Friday about the upcoming negotiations caused stocks to sharply cut their gains.
The president, who defeated Republican candidate Mitt Romney in Tuesday’s U.S. election, outlined a position for the fiscal issues on Friday that is far apart from that of his political opponents, suggesting a long battle is to come.
“If the market anticipates a resolution to the fiscal cliff or Europe or any of the other bricks in the wall of worry, we could easily take off,” Sarhan said.
Seventeen of the Dow’s 30 components are trading below both their 50-day and 200-day moving averages, while another eight are under their 50-day levels, but not their 200. Only five components – Bank of America, JPMorgan Chase & Co , Home Depot Inc, Johnson & Johnson and Travelers Cos – are above both support levels.
Another big negative for the market has been heavy selling of Apple shares. The stock of the world’s biggest company, ranked by market capitalization, lost 5.2 percent this week, weighing heavily on both the S&P 500 and the Nasdaq . The stock is down 22.4 percent from its Sept. 21 all-time intraday high of $705.07.
BIG RETAILERS’ REPORT CARDS
The election and fiscal cliff concerns, which came on the heels of Superstorm Sandy and its devastating effects on many parts of the U.S. Northeast, have captured so much attention that they’ve overshadowed weakness coming from third-quarter earnings.
With results in from 449 of the S&P 500 companies, third-quarter earnings now are estimated to have declined 0.3 percent from a year ago, which is slightly better than the forecast at the start of the reporting period. Results have been especially weak on the revenue side, however, with just 38 percent of companies beating on sales, Thomson Reuters data showed.
But recent stronger economic data, including a report on Friday showing consumer sentiment at more than a five-year high in early November, suggests that retailers, many of which have yet to report, could be among the stronger performers this earnings period.
Next week, results are expected from such big names as Target, Wal-Mart and Home Depot.
Consumer discretionary companies have outperformed the broader S&P 500 in earnings, with 72 percent of the companies in that sector beating analysts’ expectations, compared with 63 percent for the S&P 500 as a whole.
Investors will be paying close attention to those results with the holiday shopping period around the corner, said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey, which oversees about $1 billion in assets.
“It’s really the beginning of the Christmas sell season, and I think there’s going to be a lot of interest with the outlook for that season and how promotional companies are going to be,” Meckler said. (Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com )
URL: http://www.reuters.com/article/2012/11/10/usa-stocks-weekahead-idUSL1E8M94HV20121110

09 Nov
Daily Market Commentary

Stocks Slice Below 200 DMA Line

Nasdaq – 5th Consecutive Weekly Decline

Friday, November 09, 2012
Stock Market Commentary:

The major averages sliced below support and continued tracing out their 8-week downtrend (series of lower highs and lower lows) as the bears remain in clear control of this market. It is important to note that the market is “oversold” and due for a bounce. Keep in mind that oversold markets can get a lot more oversold before they bounce. Put simply, the path of least resistance is down until the major averages trade above their respective downward trendlines and their 50 DMA lines. Until then, by definition the trend remains lower. So far, this appears to be an ugly pullback after a big run evidenced by the fact that the major averages are still less than 10% below their recent highs. Most people define a correction when a market (or stock) falls more than 10% below a recent high. So far, the reaction to earnings has been outright awful which suggests investors are not happy with the results. Bottom line: Investors want to know what catalyst (s) will help the market rally from here.

Monday- Wednesday’s Action: Stocks Tank After Election

On Monday, stocks were quiet and ended with modest gains after spending most of the session trading in and out of positive territory. The economic data came in just shy of estimates. The ISM service index slid to 54.2 last month which just missed the Street’s estimate of 54.5 and was below September’s reading of 55.1. On a positive note, it was encouraging to see the number come in above the boom/bust level of 50, signaling expansion. According to CNBC.com: on average, the DJIA and S&P 500 have performed better under Democratic presidents with the Dow returning an average gain of 74 percent and the S&P returning a gain of 80 percent. That compares with the Republican average gain of 47 percent for the Dow and 41 percent for the S&P. The data for the DJIA dates back to 1901, while the S&P 500 data dates back to 1928.

Stocks rallied on Tuesday, helping the major averages bounce off support (their respective 200 DMA lines). Stocks were benefited when EU woes eased a bit after EU Economic and Monetary Affairs Commissioner Olli Rehn made positive comments regarding Greece’s ability to fix its troubled economy. As expected (I have held this stance and repeated it many times since Romney became the Republican nominee) that Barack Obama will easily beat Romney. It was very interesting to see stock futures edge lower every time Obama took the lead and edged higher whenever Romney moved ahead.
Stocks were smacked on Wednesday, suffering one of their largest declines of the year, as investors were concerned that a fiscal crisis is on the horizon and more negative news came out of Europe. Greece passed their latest austerity measures but scores of Greek citizens rioted in Athens. The ECB cut their forecasts for European economic growth in 2012 and 2013 and said not even Germany is immune to a slowdown. There was a lot of technical damage on the charts. The benchmark S&P 500, tech-heavy Nasdaq composite, and the DJIA sliced below their respective 200 DMA lines for the first time since the June low.

Thursday-Friday’s Action: Stocks Continue To Fall

Stocks ended lower on Thursday after investors dismissed the latest round of economic and earnings data. Before Thursday’s open, the Labor Department said weekly jobless claims fell to 355k which was below the Street’s estimate of 370k. Meanwhile, the trade deficit narrowed to $41.5B in September after a downwardly revised August reading of $43.8B. Economists thought the deficit would be $45.4B. The benchmark S&P 500 sliced below its 200 DMA line on Thursday which is not a healthy event. Stocks were quiet on Friday as the sellers continued dumping stocks as concerns flared regarding the EU debt crisis, the US fiscal cliff, lackluster earnings and deteriorating technical conditions.

Market Outlook- Correction:

From our perspective, the market is in a clear correction and the trend is down as long as the major averages continue trading below their respective 50 DMA lines and their 2-month downward trendline. We will turn more bullish once the major averages trade back above their respective 50 DMA lines. As always, keep your losses small and never argue with the tape. 

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