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For Monday December 3, 2012


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Dow +3.76 at 13025.58, Nasdaq -1.79 at 3010.24, S&P +0.23 at 1416.18

 

The cliff is near  A pretty good week with the NASDAQ and the Russell 2000 having the largest gains. We did not see a very big expansion of new highs however there were some.  The market is still set up well enough to continue higher and perhaps make new highs but it has gained much in the last two weeks so becoming shorter term overbought. Typically the market has a pullback in December then a rally to end the year. This year we have the congressional games in the fiscal cliff that may disrupt the usual trading as seems each day we see trading based on the spin of the day.   The one issue that seems strange to even have them debate on is the top tax rate. Currently it is at 35% and the President wants it at 39% so they could settle on somewhere in between. But - it probably means very little as the top earners do not pay that rate anyway. We know that Mitt Romany with $20 million in earnings pad just 14% and Warren Buffet paid just 17% so who really cares what the official rate is? Actually the real issue is whether any tax change  or budget plan  can really alter the outcome of the economy in the short term anyway. It has not in the past.  Despite the gyrations we have had a good week and many watch list stocks continue to move higher.  PPHM had a 23% gain on Friday and another biotech GALE also has done well.

Mike Burk tells us Since 1928 the SPX has been up 75% of the time in December with an average gain of 1.5%. During the 4th year of the Presidential Cycle the SPX has been up 81% of the time with an average gain of 1.8%. The best December ever for the SPX was 2008 (+10.7%), the worst 1931 (-13.4%).

Now only 3 weeks away is the Winter solstice on December 21. Like so many other times in the past, there is again a group of people who like to promote doomsday ideas and they seem to think this date very important - well at least to ancient Mayans. We think it will just be another date like past events that people have had fun with over the years as I doubt that they predicted the fiscal cliff.

 

 

Before we get to the charts - a video.

Alan Watts 1915-1973 best known as an interpreter and populariser of Eastern philosophy for a Western audience. Living on the West Coast, Watts gained a large following in the San Francisco Bay Area while working as a volunteer programmer at KPFA, a Pacifica Radio station in Berkeley. Watts wrote more than 25 books and articles on subjects important to Eastern and Western religion, introducing the then-burgeoning youth culture to The Way of Zen (1957), one of the first bestselling books on Buddhism. In Psychotherapy East and West (1961), Watts proposed that Buddhism could be thought of as a form of psychotherapy and not just a religion. Like Aldous Huxley before him, he explored human consciousness in the essay, "The New Alchemy" (1958), and in the book, The Joyous Cosmology (1962). YouTube has thousands of videos using work from him. Here is one about - What if Money didn't matter.

 

 Economic activity in the U.S. increased by more than previously estimated in the third quarter, according to a report released by the Commerce Department, with the upward revision reflecting bigger than previously estimated increases in private inventory investment and exports. The report showed that GDP increased at an annual rate of 2.7 percent in the third quarter compared to the 2.0 percent growth previously reported. Economists had expected the pace of GDP growth to be upwardly revised to 2.8 percent.    graphs - RTTNews

After seeing considerable volatility in recent weeks, first-time claims for U.S. unemployment benefits showed a relatively modest decrease in the week ended November 24th, according to a report released by the Labor Department. The report said jobless claims dipped to 393,000, a decrease of 23,000 from the previous week's revised figure of 416,000. Economists had expected jobless claims to fall to 390,000 from the 410,000 originally reported for the previous week.

Durable goods orders were flat in October, according to a report released by the Commerce Department. The unchanged reading contrasted expectations for a decline and came about due to strength in electrical equipment, computer/electronics, machinery and metal orders. Excluding transportation, orders were up 1.5 percent. On a more positive note, non-defense capital goods orders, excluding aircraft, considered a proxy for capital spending, climbed 1.7 percent after declining for three straight months. However, shipments of this category of goods fell 0.6 percent.

The Conference Board’s consumer confidence index rose to 73.7 in November from 73.1 in October, reaching the best level since February 2008. The present situation index remained almost flat at 56.6, while the expectations index rose 1.1 points to 85.1.

The index of U.S. leading economic indicators rose at a slower pace in October as businesses held back on investment in anticipation of domestic fiscal policy changes set to take effect in January. The Conference Board’s gauge of the outlook for the next three to six months increased 0.2 percent after a revised 0.5 percent gain in September that was lower than initially reported.

An index measuring the number of Americans who signed contracts to buy homes in October jumped to nearly its highest level in almost six years. Steady job gains and record-low mortgage rates have made home-buying more attractive. The National Association of Realtors said Thursday that its seasonally adjusted index of pending home sales rose 5.2 percent to 104.8 in October. Excluding a few months when the index spiked because of a home-buyer tax credit, that is the highest level since March 2007.

With personal income in the U.S. coming in nearly unchanged in the month of October, the Commerce Department released a report showing that personal spending for the month unexpectedly saw a modest decrease. The report showed that personal income edged up by less than a tenth of a percent in October following a 0.4 percent increase in September. Economists had expected income to increase by about 0.3 percent. Additionally, the Commerce Department said personal spending fell by 0.2 percent in October after climbing by 0.8 percent in September. The drop came as a surprise to economists, who had expected spending to inch up by 0.1 percent.

Chicago PMI faintly accelerated in November, rising to 50.4 from 49.9 in October.

With third-quarter earnings largely in the books (over 97% of S&P 500 corporations have reported), today's chart provides some long-term perspective to the current earnings environment by focusing on 12-month, as reported S&P 500 earnings. Today's chart illustrates how earnings declined over 92% from its Q3 2007 peak to Q1 2009 low which brought inflation-adjusted earnings to near Great Depression lows. From its Q1 2009 low, S&P 500 earnings surged to a level that approached its credit bubble peak. Since Q4 2011, however, earnings have gone flat and have actually declined over the past two months. In the end, the latest data has inflation-adjusted earnings making new 13-month lows.

Existing This past week's   sectors.

 

This past week's indices  -   

The Dow ended the month down 70 points though the NASDAQ and Russell 2000 were up for the month. The S&P 500 was close to the flat side and oil made a minor move higher as gold was down just slightly. The major stock indexes are all below the breakout line  from a couple of months ago, but they could rise above if we find a New Year's rally.

 

As you see on the 60 min. charts the last couple of days have been pretty flat which is generally a set up for a larger move up or down. The noticeable details over the past seven or so days were what you watch for if trading short term. Using the Dow as an example and the 60 min. charts, there was a break over the top Bollinger band when rising to 13,010 and that signaled the over bought conditions which took it down to a low of 12,765 and below the lower Bollinger bands. These over bought and oversold indications are not 100% accurate but they were good signals for the reversals that followed.

The weekly Dow Jones industrial chart is bullish. It dropped below the 61.8% Fibonacci retracement level, rallied back above and also back over the trendline in blue. RSI had also turned back up and judging only by the chart and not the politics, one would expect at least a move back up to the horizontal blue line.

In this weekly view of the cash Dow note the 20 week moving average at 13,170 as it may be some minor resistance.

The daily chart shows it back at this Fibonacci level just under the 50 day EMA at 13,065.

This Dow futures chart has a very short term Fibonacci projection based on the dip it took in the last couple of days. It  was a nice  move from that low up to the 127.2% projection and has been basing just underneath.  Expect some additional resistance at 13,136.

Two weeks ago the transportation average had bounced at prior support and this week continued the gains closing back over moving average resistance. Next we see overhead resistance at the green trendline.

Last week we showed the NASDAQ summation index had just started the crossover and this week the index separated from the five day EMA  a good distance confirming the bullish trend.

The number of new highs did not expand greatly this week on the NASDAQ. So here we see the moving average of the new highs in blue has risen more.

The NASDAQ on the weekly chart we see has moved almost back up to the underside of the formerly broken trendline. These are places often watched closely by short sellers as a typical place for entering shorts as the  stops go just overhead. If we do get a break over, a rally could briefly accelerates.

This NASDAQ chart shows that the rally from the 78.6% retracement has taken prices back up to the 38.2% level where it shows resistance.

The 60 min. NASDAQ chart having a different Fibonacci timeframe shows the close was just under the 50% retracement level which has been significant support or resistance in the past. A move above would likely go back to the next level near 3060.

The NASDAQ 100 futures shows in more detail this move to the 50% retracement level, which is shown in the reverse order, in other words moving back up towards the top of 2873. RSI at 30 had caught the lows and now it is back under 70 but still in this consolidation pattern.

The NASDAQ 100 ETF mechanical chart from our stockcharts public page remains on a buy.

Also on that page is the ultra NASDAQ 100 ETF as it had a cross over buy on November 19 and a very quick whipsaw on the 28th and remains on a buy at the moment though the moving averages are quite close.

During its correction Google had dropped to the 61.8% Fibonacci level and  rallied to above the 38.2% level which is bullish. You would not want to lose the $680 level.

Amazon has also recovered nicely after its bounce and breakout from its bull flag and now has some expected resistance at the 78.6% retracement level.

Apple moved up almost 90 points from its low near the 50% retracement and lower parallel channel line. It has resistance at the 50 day EMA at $596.65.

Besides the 50 day EMA resistance this shows the former 61.8% just  overhead.

The weekly moving averages of the semi conductor index are getting closer together and to separate them we really need to see a rally in this sector. There was a gain of 1.4% this week but while it remains under these moving averages it is not yet bullish.

The moving average of the number of new highs on the NYSE minus new lows has now risen back above this red trendline in the lower section while the price chart above that is back up to the broken trendline.

In this view of highs minus lows the rally took it from the lower Bollinger band to the top.It consolidated a bit on Friday

54% of all stocks on the NYSE are now back trading over their 50 day moving average.

Our S&P 500 bullish percent chart had given the buy signal in the prior week and remains so this week.

The daily chart by one point has crossed back over the 20 week moving average for its buy as well.

On the S&P 500 weekly chart closer view we see the close just slightly over the 20 week moving average with some resistance just overhead at the horizontal green line.

In this weekly view it shows the correction recently took it to the test the trendline and the 61.8% retracement level. The pattern is so recognizable that many will be looking to see that if there is no breakout, will it form a right shoulder in this price range to match that on the left.

In this daily view we see the nice breakout on Thursday and then the consolidation on higher volume on Friday so this remains bullish.

The 15 min. chart now has a pretty clear trendline you may want to watch for stops or entries if it holds. Note that there is additional support just under 1400.

Our 15 min. mechanical chart goes from giving extended moves with decent gains to whipsaws in between.

This S&P 500 futures chart shows a very short term Fibonacci projection based on the dip it took this week. It closed right at the 127.2% and has the 161.8% at 1423.

Another popular way of trading the S&P 500 is with this ultra ETF and it went to buy on 19 November and remains so based on EMA crossovers though there was a dip below both the may have shaken out traders near the 28.

The Russell 2000 daily chart gapped up on Thursday. We would rather see that gap get filled and a test of the 50 day EMA at $812 before much continuation. There is resistance also seen here it $830 level.

And here on a different view as it retraced almost to the 78.6% level. It is now back over the 38.2% line.

The 60 min. Russell 2000 shows this gap also took it over the trendline and for sure a pullback to it will be watch for a possible by point. If the test holds.

Here showing the popular 3-X Russell 2000 ETF with that same trendline. After it's significant move up after RSI moved back over 30. This has gained about 10 points from this rather mechanical buy. If you have limited trading it can be very profitable to only trade such clear setups. They don't always work but when they don't your losses are minimal and your gains can be very significant. A crossover buy was in May that would've been stopped out and then in June when it caught the low for a run from about $42-$69. In that area RSI dropped under 70 for a sell near the top. The buy in November was right at the 61.8% support as RSI again went over 30.

The Value Line broke above the trendline on Thursday, which is very bullish and would be more so on a break over the $3090 resistance.

The 30 year treasury bond prices were calm this week closing above the 20 day moving average.

The banking sector is right at a moving average cluster and if it breaks to the upside above 49 still has resistance just under this short term trendline closer to 50.

The retail sector continued its move up this week after breaking above the trendline or possible bull flag a week prior. It is now touching the top Bollinger bands, though a bit longer term is not yet at over bought levels.

Here is a longer-term view of the emerging markets ETF it is close to the trendline.

The Dow Jones world stock index added an additional .88% this week sitting in a general area of strong resistance

The FTSE did about the same,  moving up .8% but also in a resistance  area.

The Shanghai composite index is troubling for USmarkets as well.  Even if they do not show it yet they will if this continues. It ended the week down 2.3% under this prior support.

The general commodity ETF was very flat this week closing up three cents.

Oil gained 1% moving up closer to the horizontal resistance area near $89 or $90. a breakout in price would help the Dow but not really the general economy

The above chart looks fairly bullish as it has broken above the trendline with another level just overhead.. This oil futures chart is not quite so bullish as there is a possibility that this short-term pattern from late October and November is a bearish flag and a resolution could be lower.

Natural gas at almost reached the 200 week EMA but after it's very significant gain it dropped this  week for the total decline of 8%.  RSI had risen from 30 to 70 so it's not a shock that this is taking place.

The natural gas futures we had shown on our live streaming charts page this lower trendline in blue as it was one to watch for a possible bounce as RSI was already oversold. It instead broke that trendline and came back to test it from underneath which as you know is a typical place for shorts and that took it back down again. If it continues lower some near term Fibonacci projection levels are shown at the 127.2% and 161.8% levels. RSI on this even longer timeframe chart is quite oversold at 22 area

In the prior week gold had rallied and this week it gave it back on higher volume.

On the daily view you see Monday it was just consolidation but it dropped below the Monday's low for a sell and continued down through Wednesday with a consolidation Thursday at the 50 day EMA and then a drop on Friday.

The gold futures chart shows the RSI had dropped under 70 prior to it reaching its high and the 61.8% Fibonacci level which suggested a sell.

The gold miners ETF after having a big decline two weeks ago we recovered slightly the following week and this week dropped back down under the previous week's low.

Our mechanical GDX chart being  slower to respond still in on the long side.

Silver had made a bullish move from its moving averages and actually this week we have the 20 week MA back above the 50 week EMA by $.07 which is bullish but the small decline this week was on higher volume.

The close of the silver ETF this week was at a significant point because it is at the bottom of this parallel channel which could be a bearish one. So shorts will be ready to sell with a break under 32.

On the mechanical chart however for SLV it is still shown as a long.

Palladium was one that became very bullish three weeks ago with its high volume move back over the 20 week moving average ended up an additional 3% this week, though it is now running into the resistance area over 700.

Copper also continued its move with a gain of over 3% and it closed back over its 50 week EMA which is of course bullish.

The euro also remains over the 50 week EMA in our take is still a bullish  though we do understand many feel that the dollar is getting close to a bounce point wish you would expect to then take the euro down.

When the euro futures corrected they did so to go down and test the formerly broken trendline, making for a wonderful buy point and the close is still back inside this small triangle

The US dollar remains under both the 20 and the 50 and 200 week EMA and closed flat.

 

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Check the updated Earnings Calendar on all overnight holds.

 

This week's economic calendar for the USA. 

Volatility mean opportunity for futures trading and it is free to try it out.

Global Futures has many platforms available for trading futures and Forex but a very popular one is Global Zen Trader as it is very customizable with  exceled built in  charting that can be used free floating.  We made a short video about it giving a very general overview, and we have links on that page to several other videos about this platform. You can try it for free using live streaming data in order to see if future's trading is right for you..  link here so give it a watch and try it out.

zen tradeer

 

Futures and  Forex trading

Global Futures continues to offer excellent service and a variety of trading platforms such as the new Global Zen Trader which includes charts. They have a special offer  for StockTiger readers - 20 commission free contracts.

To try futures trading you may sign up for a free simulated account that uses live streaming data. Several platforms to chose from. Futures can be volatile so great opportunities  for wide swings. If you call them ask for Trenton and mention StockTiger. Click on the Demo image below to sign up.

Or for more information fill in form - click below

 

If you trade ETFs our large list of them is here hhttp://stocktiger.net/etf/etf.php  A list of the standard, 2X and 3X ETFs from Proshares.  


Dave Brubeck Quartet -  founded in 1951 by Dave Brubeck and originally featuring Paul Desmond on saxophone and Brubeck on piano Joe Morello on drums, and Eugene Wright on bass.  Take Five (Belgium 1964)

When any of you sign up for a new stockcharts.com accounts there is a space to put in a referral name on that form. If you enter stocktiger@stocktiger.net they give us credit. Thanks!

 

This weekend's transmission of Hearts of Space is named  Illumination  - ambient chamber music for the season of light. You have until 3AM EST today to listen for free on their site or check your local PBS radio station for their schedule.  

 

New additions to our watch list we add new ones each day.   There are too many so pick the ones you like the best and set alerts. We also show the list and current prices and level to watch on our live page each day during market hours so it is very easy to follow,   You can also check progress on our Public Stockcharts pages.

AMSC   Over $2.81 then $2.90 20-day MA

BG     Over $73.50

EVER    Over $15.00

SPR     Over $15.90

LPS    Over $24.91

EV    Over $32.17

For your eyes and mind 

Photograph  by Oleg Gawriloff

 

Photograph by Victor Vasilev

 

 

Photograph by Marvi Khan

 

That's a full lid for today - have a great week. 

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Check the Earnings Calendar on all overnight holds.

 

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