I am going to be on Fox Business today at 1:30pm assuming Mother Nature lets me get there! The discussion will focused on the Dow’s run to all time highs, today’s very good employment report and IF you should commit new money to stocks right here.
The latest Street$marts has been posted!
If Santa Claus should fail to call, bears may come to Broad and Wall.
That’s an old stock market adage indicating that if we do not see the traditional Santa Claus rally over the final five trading days of the year, the potential for a bear market or major decline increases in the New Year. The final five days clocks at the close on the 21st, coinciding with the end of the world according to the Mayans.
There is also a trend that shows a very seasonally strong period for semiconductors from now through year-end. This group is one my canaries in the coal mine and absolutely vital for the long-term success of any bull market.
Besides the most overhyped event since Y2K, the “dreaded” Fiscal Cliff, news flow should really taper off until January 2 or 3, which is one of the reasons why this is typically a seasonally positive time of year.
It’s also getting close to when I release my Fearless Forecast 2013 as well as my Shockers 2013 lists. If only I knew what the heck I was going to write about!
Hopefully, I will send a Street$marts shortly, but in case I don’t, I wish you and your family a very happy, healthy and safe holiday week!
Here is the latest Street$marts that talks about Black Friday, Facebook, Apple, the “dreaded” Fiscal Cliff, how the bull market ends and some evidence of a weakening economy.
Posted December 13, 2012
By Trang Ho, Investor’s Business Daily
Stocks, gold and silver jumped while U.S. Treasuries and the dollar sold off Wednesday after the Federal Reserve said it’s expanding its economic stimulus program, known as QE3.
The Fed will buy $45 billion a month in long-term Treasuries, to offset the expiration of “Operation Twist.” The Fed will also continue buying $45 billion a month in mortgage-backed securities.
The Fed said its stimulus programs would remain in effect until the unemployment rate stays below 6.5% and one- and two-year inflation forecasts stay below 2.5%.
“These ridiculous guarantees at best make the investing public think its central bank has any real control from here,” Jonathan Citrin, CEO of CitrinGroup in Birmingham, Mich., with $60 million in assets, wrote in an email. “There are far too many circumstances that may occur along the path to lower unemployment to make such firm and definite statements.”
SPDR S&P 500 (SPY), up as much as 0.4% intraday, ended nearly flat after Fed chief Ben Bernanke said the fiscal cliff already appears to be affecting the economy. SPY is trading above both its 50- and 200-day moving averages, reflecting a strong uptrend.
Homebuilder and basic material ETFs, tracking some of the most economically sensitive sectors, led. If “QE Unlimited” works, these groups would benefit most from the stimulus as Bernanke has long blamed the housing slump as the single biggest drag on the economy, said Paul Schatz, president of Heritage Capital in Woodbridge, Conn.
PowerShares DB U.S. Dollar Index Bullish (UUP), measuring the greenback against a basket of major foreign currencies, sank 0.2% to 21.84. More QE weakens the currency because it involves printing more of it.
Gold Miners Jump
The dollar’s weakness lifted precious metals prices. SPDR Gold Shares (GLD) rose 0.1% to 165.78. It’s consolidating below its 50-day moving average but above its 200-day line, indicating a weak uptrend.
Market Vectors Gold Miners (GDX) and other precious metals miner ETFs were among the day’s leaders. GDX surged 3% to 47.61. It’s forming a large cup-with-handle base with a potential buy point at 55.35.
IShares Silver Trust (SLV) rose 1% to 32.35 in heavy volume. It jumped above its 50-day line, which means it’s in a strong uptrend. Its chart appears to be forming a bullish, cup-with-handle pattern with a 33.41 buy point.
Global X Silver Miners ETF (SIL) popped 2% to 23.51. It’s forming a large cup-with-handle base with a 25.88 buy point.
Precious metals reflect the dollar’s weakness more so than growth in value, Mark Thomas, founder of SilverPriceAdvisor.com, wrote in a client note. They will rise as long as governments and central banks print money, keep interest rates low and spend with record deficits.
IShares Barclays 20+ Year Treasury Bond (TLT), the most widely traded ETF of its kind, dropped 1% to 122.59, a one-month low. It sliced below its 50-day line but found support at its 200-day line.
TLT’s been heading south since late July as interest rates gradually strengthened.
The Fed’s $45 billion a month in bond purchases was the least the market had expected, so Wednesday’s announcement wasn’t enough to change investor sentiment, said Schatz.
I am going to be on CNBC’s Squawk Box on Wednesday (11/21) at 6:20am discussing the Fiscal Cliff, our forecast to year-end and the potential for recession. After that, I hope to have a Street$marts to you by the end of the day.
Just in case I don’t, I wish you and your family a very happy Thanksgiving!
After Friday’s reversal from early losses on the “news” regarding the Fiscal Cliff, the bulls put on an ole fashioned stampede today with more than 90% of the volume on the upside and almost 90% of all stocks closing higher. The market opened up and ran that way straight to the close, turning the short-term trend in favor of the bulls.
For the time being, the bulls have the ball and given the Thanksgiving holiday, they are supposed to keep control until next week. When markets first snap back off of a potential low, the sectors and stocks which were hit the hardest usually bounce back the hardest initially. On the index front, that’s the tech laden Nasdaq 100 and small cap Russell 2000. Sector wise, it’s software, telecom, banks, energy, industrials and biotech.
What would worry me is if this rally failed right away and fell to new lows. That would be a bad sign. Longer-term, I do not believe the lows we saw on Friday will end up being THE bottom, but this rally should be decent enough to enjoy.
It certainly took a while, but the bulls finally drew a line in the sand and defended their turf after a 9% pullback from the September peak. The day started out like many others during the decline with weakness to new lows. But after the “geniuses” in congress held a press conference and all agreed to compromise (Gee, what a word!), stocks lifted and ran higher into the close as monthly options expiration and short covering ahead of the weekend most likely helped the cause.
Keep an eye on everyone’s favorite or former favorite, Apple, as this stock has been hit with the ugly stick and will likely bounce hard when and if the overall market does.
Next week is a holiday shortened week that has a positive seasonal bias. I would look for the bulls to make some noise early.
Congratulations to President Barack Obama and all of the politicians who were elected by the American people last night. In the end, although my candidate did not win, Democracy was and is always the big winner. As you know, I hardly ever use the word “hope” when discussing investing, but in this case, I do hope we somehow see congress and the president at least genuinely attempt to work together on a bipartisan basis. I don’t know a single person who wants four more years like the last two in DC.
I am going to be on FOX Business’ Markets Now at 1:30pm est today discussing the election results and its impact on the stock market and economy.
In yesterday’s Street$marts, (http://www.investfortomorrow.com/newsletter/CurrentStreet$marts20121106.pdf) I made the case that an Obama victory would see market upside and a Romney victory would see weakness. And that whatever the move was, it should continue into next week. So what’s going on today and why the sea of red in the stock market and the Dow now under 13,000?
Stocks traded higher on Monday and Tuesday. Some say it was Romney, while others say it was Obama. To me, it’s irrelevant. You can see that last night from 5pm to 10pm, the S&P 500 futures (an indicator of the overall stock market) traded lower as the results were announced. After Obama achieved 270 electoral votes for reelection, the S&P 500 futures turned around and headed higher until almost 6am. So when I woke up and saw the green, I thought the market would open to the upside.
That was until the European Central Bank’s Mario Draghi made negative comments about Germany’s economy weakening. From there, the futures fell sharply straight to the U.S. open at 9:30am and have continued lower ever since. Was Obama’s reelection the cause of today’s carnage or was it the ECB? In the grand scheme, it doesn’t really matter, but given the weakness in the financials and materials and relative strength in consumer discretionary stocks, it certainly looks like Europe is the bigger driver than the election.
I would look for the weakness in stocks, on balance, to continue into next week before another attempt at a meaningful bottom begins for a year-end rally.
Here is the latest Street$marts.