Tuesday, December 27, 2011 Stock Market Commentary:
Stocks opened the shortened holiday week higher after the latest round of U.S. consumer sentiment topped estimates. From our point of view, Monday marked Day 5 of the current rally attempt which means the window is now open for a new follow-through day to emerge [as long as Tuesday’s (12/20/11) lows are not breached]. It was encouraging to see the benchmark S&P 500 index open higher after positively reversing last week.
Home Prices Fall But Consumer Confidence Tops Estimates
On Monday, all markets in the U.S. were closed in observance of Christmas. Stocks opened higher on Tuesday which marks the beginning of one of the strongest week’s of any year. Historically, the U.S. stock market tends to rally during the last week of the year (between Christmas and New Years) and we will see if this year is an exception or matches the historical precedent. Stocks were quiet on Tuesday after investors digested the latest round of mixed economic data. The Case-Shiller Home Price index fell for the second straight month in October across much of the nation. Elsewhere, the Conference Board said its consumer confidence index rose to 64.5 in December from a downwardly revised 55.2 in November. This easily topped the Street”s estimate of 58.3 and since the consumer makes up approximately 2/3 of the U.S. economy, stronger consumer confidence bodes well for the economy.
Market Outlook- In A Correction
The major averages are back in positive territory for the year which is a healthy sign. We find it very disconcerting to see other (leading) risk assets flirt with fresh 2011 lows in recent weeks. China’s Shanghai Composite (normally a leading risk on/off indicator) has fallen below its October low and hit a new 2.5 year low. The euro, which is strongly correlated to U.S. stocks and other risk assets also took out its October low on Tuesday (12/13) which is not ideal. Meanwhile, Gold sliced below its longer term 200 DMA line on on Wednesday (12/14) for the first time since August 2008 (1-month before Lehman failed) and remains below that critical level. Other risk assets such as Oil, Silver, Copper, etc are also under pressure which suggests the global risk off trade is getting stronger. As an easy reference point, if the benchmark S&P 500 would simply fall to its Oct low, that would be 1074! Sometimes, caution is king.
Host Of The #SmartMoneyCircle Podcast, Founder and CEO of 50 Park Investments. Adam provides weekly market updates to ChartYourTrade.com readers. He is a FORBES Contributor and is a frequent guest on all the major financial media outlets.
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
Home Prices Fall But Consumer Confidence Tops Estimates
Tuesday, December 27, 2011
Stock Market Commentary:
Stocks opened the shortened holiday week higher after the latest round of U.S. consumer sentiment topped estimates. From our point of view, Monday marked Day 5 of the current rally attempt which means the window is now open for a new follow-through day to emerge [as long as Tuesday’s (12/20/11) lows are not breached]. It was encouraging to see the benchmark S&P 500 index open higher after positively reversing last week.
Home Prices Fall But Consumer Confidence Tops Estimates
On Monday, all markets in the U.S. were closed in observance of Christmas. Stocks opened higher on Tuesday which marks the beginning of one of the strongest week’s of any year. Historically, the U.S. stock market tends to rally during the last week of the year (between Christmas and New Years) and we will see if this year is an exception or matches the historical precedent. Stocks were quiet on Tuesday after investors digested the latest round of mixed economic data. The Case-Shiller Home Price index fell for the second straight month in October across much of the nation. Elsewhere, the Conference Board said its consumer confidence index rose to 64.5 in December from a downwardly revised 55.2 in November. This easily topped the Street”s estimate of 58.3 and since the consumer makes up approximately 2/3 of the U.S. economy, stronger consumer confidence bodes well for the economy.
Market Outlook- In A Correction
The major averages are back in positive territory for the year which is a healthy sign. We find it very disconcerting to see other (leading) risk assets flirt with fresh 2011 lows in recent weeks. China’s Shanghai Composite (normally a leading risk on/off indicator) has fallen below its October low and hit a new 2.5 year low. The euro, which is strongly correlated to U.S. stocks and other risk assets also took out its October low on Tuesday (12/13) which is not ideal. Meanwhile, Gold sliced below its longer term 200 DMA line on on Wednesday (12/14) for the first time since August 2008 (1-month before Lehman failed) and remains below that critical level. Other risk assets such as Oil, Silver, Copper, etc are also under pressure which suggests the global risk off trade is getting stronger. As an easy reference point, if the benchmark S&P 500 would simply fall to its Oct low, that would be 1074! Sometimes, caution is king.
What we have seen from the October 4, 2011 low was simply an over sold bounce into a logical area of resistance (200 DMA line). Now that the 200 DMA line was taken out it will be important to see how long the market can stay above this important level. If you are looking for specific help navigating this market, feel free to contact us for more information. That’s what we are here for!
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Disclaimer: All communication from ChartYourTrade is general in nature and for educational and general informational purposes only. Under no circumstance should it be considered personalized investment advice. All our work is general in nature and not specific to any one person. All the information on this site and/or that originates from us, or any of our partners or affiliates, is for educational and informational purposes only and is NOT a recommendation to buy or sell anything. To avoid any conflicts of interest, we do not have a working relationship with any of the companies mentioned in our work. Furthermore, we may have a long, short, or no position in any, or all, of the names that appear in our work and they may change at any time without notice. Investing and trading in capital markets or using margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. Before you decide to invest or trade in capital markets you should carefully consider your investment objectives, level of experience, and risk appetite, among other factors. The possibility exists that you could sustain a loss of some, all, or more of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with capital markets, investing/trading, and seek specific investment advice from an independent financial advisor and other professionals. Remember all the information we provide is for educational and general informational purposes only and is subject to change without notice.
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