Stocks Fall For Day, Week, & Month

Byinfo@50park.com

Weak CloseFriday, December 28, 2012
Stock Market Commentary:

Stocks closed below their respective 50 DMA lines last week which is not a healthy sign. The uptrend that began on Friday, November 16, 2012- after politicians hinted that a deal would get done for the fiscal cliff is under pressure and appears to be weakening every day. The major averages fell below several important levels last week (last month’s high, their respective 50 DMA lines, their downward trendlines and the necklines of inverse head and shoulders patterns). In addition, stocks turned lower for the day, week and month. Looking forward, the next area of support is last week’s low and then November’s low of 1343 in the S&P 500. Meanwhile, the the next area of resistance is December’s high of 1448 and then 1474 (2012’s high).

Monday-Wednesday’s Action: Fiscal Cliff Woes Hurt Stocks

Stocks fell on Christmas Eve’s shortened holiday session as investors continued to wait for a deal regarding the Fiscal Cliff. Leading stocks were relatively quiet to slightly lower as they consolidated their recent 6-week rally (from the 11/16/12 low).  Stocks were closed on Tuesday in observance of the Christmas Holiday.
Several stock markets around the world were closed on Wednesday in observance of the Boxing Day Holiday. Japanese stocks rallied after Japan’s new PM Shinzo Abe was approved by parliament to become the next Japanese premier. Mr. Abe wants to spark growth and has promised unlimited money printing to end Japan’s bout with deflation. Elsewhere, China opened the world’s longest high-speed rail line, connecting Beijing to Guangzhou in an eight-hour ride (previously 20 hours).
In the U.S., the major averages ended lower on Wednesday as Fiscal Cliff woes continued to weigh on markets. President Obama cut his vacation short and returned to D.C. to help resolve this issue. Meanwhile, house GOP leaders did not issue a 48hr notice asking members and their staffs to return from their respective vacations. I have said it before, and shall say it again, there needs to be a serious shakeup in the leadership of the Republican party. If they were a stock, their chart would continue to tank. Even if it were only for show- House GOP leaders should have asked their members to return from their vacations to address this important issue as soon as physically possible. After Wednesday’s close, Treasury Secretary sent a letter to Congressional leaders letting them know that the US will hit its debt ceiling on December 31 (hoping to prompt action). Economic data was mixed. MasterCard Advisors Spending Pulse (MA) said preliminary data showed that holiday sales rose +0.7%, or the lowest level since 2008. The S&P/Case Shiller home price index of 20 major U.S. cities rose +0.7% in October which was higher than the Street’s expectation for a gain of +0.5%. The Federal Reserve Bank of Richmond said manufacturing in the Central Atlantic region edged higher in December.

Thursday & Friday’s Action: Stocks Defend Support

There was a lot of technical damage done intraday on Thursday before the bulls showed up and defended support by the close. In the morning, Senate Majority Leader Harry Reid publicly attacked Mr. Boehner and said that we appear to be headed over the cliff. The DJIA, SP 500, & Nasdaq composite (all three major averages) sliced below short term levels of support (their respective 50 DMA lines) and turned negative for the month.  Then, the bulls showed up in the afternoon defended support and erased earlier losses helping the major averages close near their highs after news broke that the House will hold a special meeting on December 30, 2012. Economic data was mixed to slightly negative. Consumer confidence missed the Street’s estimate and slid to 65.1 in December from a downwardly revised 71.5 in November. This was a four-month low and bodes poorly for the economic recovery. On  a brighter note, weekly jobless claims slid by 12k to a seasonally adjusted 350k last week. The four-week average fell to its lowest level since March 2012. Finally, new home sales rose +4.4% in November to a seasonally adjusted 377k annual rate which is the fastest pace in 2.5 years. Stocks fell hard on Friday after the much anticipated 3pm meeting at the White House was a bust. After the close, President Obama held a Press Conference and said the hour to act is upon us. He is also slated to appear on NBC’s Meet The Press Sunday morning.

Market Outlook: Uptrend Under Pressure

From our perspective, the market is back in an uptrend which bodes well for the market and the economy, by extension. It is important to note that this uptrend has weakened markedly in recent days and is currently under pressure. As always, it is extremely important to be flexible in your approach and change when the facts change (Thank you Mr. Keynes). For those of you that are new to our work, on October 9, we said “the rally was under pressure” and then said the “rally was over” on Oct 19. Immediately after that note was published, stocks fell sharply and a lot of technical damage occurred. Then we put out a note on Friday, November 16, 2012 (the exact low for this move) titled, “Time For A Bounce.” Stay tuned as we will continue to keep you one step ahead of the crowd. As always, keep your losses small and never argue with the tape.
 
 

Become a Client

Visit: SarhanCapital.com
or
FindLeadingStocks.com

 
 

Similar Posts

  • Largest Weekly Decline Since Nov. 2008!

    Byinfo@50park.com

    Market Outlook- Market In A Correction
    The latest action in the major averages suggests the market is back in a correction as all the major averages remain below key technical levels. Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. That said, the recent action suggests caution is paramount at this stage until all the major averages rally back towards their respective 2011 highs. If you are looking for specific help navigating this market, please contact us for more information.
    Stock Market Research?
    Global Macro Research?
    Learn How To Follow Trends?

  • Investors Digest A Slew Of Economic Data

    Byinfo@50park.com

    The fact that we have not seen any serious distribution days since the FTD bodes well for this nascent rally. It is also a welcome sign to see the market continue to improve as investors digest the latest round of stronger than expected economic and earnings data. Remember that now that a new rally has been confirmed, the window is open to start buying high quality breakouts. Trade accordingly.

  • Stocks Surge In 2009 But Down For the Decade!

    Byinfo@50park.com

    We would like to wish all our loyal clients & readers a very Happy & Healthy 2010! The major averages ended lower on the last trading day of the year. Volume, an important indicator of institutional sponsorship, was reported lighter than Tuesday’s totals which indicated large institutions were not aggressively buying or selling stocks. Decliners…

  • Stocks Rally On Healthy Economic Data

    Byinfo@50park.com

    Looking forward, the window is now open for disciplined investors to begin carefully buying high-ranked stocks again. The major indices’ 200-day moving average (DMA) lines may act as near term resistance. Remember to remain very selective because all of the major averages are still trading below their downward sloping 50 and 200 DMA lines. It was also somewhat disconcerting to see volume remain light (below average) behind the confirming gains. It is important to note that approximately 75% of FTDs lead to new sustained rallies, while 25% fail. In addition, every major rally in market history has begun with a FTD, but not every FTD leads to a new rally. Trade accordingly.

  • Stocks Fall As Investors Digest Economic & Earnings Data

    Byinfo@50park.com

    Market Outlook- Confirmed Rally:
    The major U.S. averages are back in a new confirmed rally and are flirting with resistance of their current 2.5 month base. The benchmark S&P 500 index scored a proper FTD on Tuesday, October 18, 2011 when it rallied over 2% on heavier volume than the prior session. The next important area of resistance is September’s highs and then the 200 DMA line. In addition, it is important to note that the bulls scored a victory since many of the major averages closed above their downward sloping 50 DMA lines for the first time since late July! Our longstanding clients/readers know, we like to filter out the noise and focus on what matters most: market action. If you are looking for specific help navigating this market, please contact us for more information.
    Fall Sale- We Will Double Your Order!!!
    Limited-Time Offer!
    www.FindLeadingStocks.com
    On Tap This Week:
    WEDNESDAY: Weekly mortgage apps, CPI, housing starts, Fed’s Rosengren speaks, oil inventories, Fed’s Beige Book; Earnings from Morgan Stanley, Travelers, United Tech, AmEx, Ebay, Western Digital
    THURSDAY: Jobless claims, existing home sales, Philadelphia Fed survey, leading indicators, Fed’s Bullard and Kocherlakota speak, NewsCorp investor day; Earnings from AT&T, Eli Lilly, Nokia, AutoNation, Microsoft, Capital One, Chipotle and SanDisk
    FRIDAY: Fed’s Kocherlakota speaks, 2011 Dodd-Frank Rulemaking Deadline; Earnings from GE, McDonald’s, Verizon, Honeywell and Schlumberger
    Source: CNBC.com