A Bipartisan Deal at Last!?
FRIDAY'S MARKET WRAP-UP
Market Snapshot for July 31, 2012 (12:15 am ET):
Closing Prices: DOW 12,143.24 (-96.87, -0.79%), S&P 500 1,292.28 (-8.39, -0.64%), NASDAQ 2,756.38 (-9.87, -0.36%), Nikkei 225 9,833.03 (-68.32, -0.69), DAX 7,158.77 (-31.29, -0.44%), FTSE 5,815.19 (-58.02, -0.99%)
OIL 95.70, GOLD 1,631.20, SILVER 40.106
EURO 1.4395, YEN 76.73, BRITISH POUND 1.6418, U.S. DOLLAR INDEX 74.035
Good day traders! I've finally made it to Illinois after a much longer-than-anticipated moving process! It turns out that a one-day trip of 1,000 miles can take three days when you have an 8.5 month pregnant woman on board! No new news in that department just yet other than threatening to arrive early in Nashville, but apparently he realized that a knack for singing country music was not in his genes and it would be best to wait a little longer!
After some internet delays we're also now up and online and I have to admit that while it was nice to have a few days to settle in, I missed keeping caught up in the market, especially with all the excitement of the past several weeks! Today's column is going to be a bit on the short side compared to normal, but I'll be back tomorrow with a full-length review and market outlook, which I'll be posting daily once again until our son arrives. I've had a lot of email questions on upcoming plans, so I'll be taking three weeks off when that happens and will be resuming my swing and position trading newsletter in October. I greatly appreciate all the wonderful emails of support over the past couple of months and want to thank all of you for putting a smile on my face during this hectic time!
Dow Jones Industrial Average
Debt Deal Brings Relief After Months of Debate and Deal-Brokering
Now, speaking of excitements, the market itself has had a lot going on in recent weeks as well! Earnings season is now fully under way. This alone can create a lot of great opportunities. Additionally, the debate on the U.S. debt ceiling had been steadily escalating throughout July as the August 2nd "deadline" approached. On Sunday, President Obama announced that a bipartisan deal had been brokered, which sent index futures sharply higher on Sunday evening.
The market had fallen sharply last week, however, and very few investors are likely to view this as a substantial saving grace. Instead, it's obvious that the road to economic recovery in this nation will be a long one and that raising the debt ceiling only emphasizes the problems we face on that road as opposed to solves them. In fact, despite Obama's announcement, the deal must still win the approval of the House and Senate. Gold, which had hit new record high on Friday, fell on the news.
The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 96.87 points, or 0.79%, and closed at 12,143.24. IBM (IBM) was the only component of the Dow that managed to post a gain on Friday, albeit barely (+0.03%)! The top decliners were Hewlett-Packard (HPQ) (-2.93%), Merck (MRK) (-2.29%), Exxon Mobil (XOM) (-2.05%), and Disney (DIS) (-1.98%). The Dow ended the week lower by 4.24%.
The S&P 500 ($SPX) loss of 8.39 points, or 0.64%, and closed at 1,292.28. The top percentage gainers in the S&P 500 on Friday were Expedia Inc. (EXPE) (+9.31%), Newell Rubbermaid (NWL) (+8.00%), Cerner Corp. (CERN) (+7.21%), and Genworth Financial (GNW) (+6.39%). The weakest were Coventry Health Care (CVH) (-7.70%), Southwestern Energy (SWN) (-6.13%), and KLA-Tencor (KLAC) (-4.53%). The index ended the week lower by 3.92%.
The Nasdaq Composite ($COMPX) ended the session lower by 9.87 points, or 0.36%, on Friday and it closed at 2,756.38. The strongest performers in the Nasdaq-100 ($NDX) were Expedia Inc. (EXPE) (+9.31%), Vertex Pharmaceuticals (VRTX) (+8.09%), Cerner Corp. (CERN) (+7.21%), and Vodaphone (VOD) (+4.66%). The weakest were KLA-Tencor (KLAC) (-4.53%), LAM Research (LRCX) (-4.11%), and BMC Software (BMC) (-3.12%). The Nasdaq Composite ($COMPX) ended the week lower by 3.58%.
Another Pain in the Side of Economic Recovery Efforts
While the debt-ceiling debate has been center stage lately, another key area to watch for this week will be the latest employment data. Friday's nonfarm payrolls will soon be on everyone's minds. This data has been disappointing lately, particularly in June when nonfarm job growth amounted to a mere 18,000 jobs. This is substantially less than is needed to even keep up with population growth and the number of new workers entering the job market every day. Few are expecting the numbers to be strong in July either, but economists are looking for an increase of about 85,000 with the unemployment rate remaining steady at 9.2%.
A Busy Week Ahead
In addition to the upcoming jobs report, a number of economic reports will be released this week that will keep the market lively. Earnings season also brings with it reports from over 100 of the S&P 500's index components. Keep an eye on the latest calendars, because unexpectedly holding overnight into an oncoming earnings report can lead to some rather unpleasant surprises by morning!
Unless otherwise stated, the index action described in this article relates to the E-mini futures contracts for the respective indices. Actual index action may differ slightly in terms of pattern formation, although the market bias will remain the same.
Toni Hansen is president and co-founder of the Bastiat Group Inc., DBA Trading From Main Street. Toni is one of the most respected technical analysts and traders in the industry. She has been trading and educating new traders, money managers, professional market analysts and traders throughout the boom and bust of the last decade. She has worked in conjunction with some of the world's top financial exchanges. Learn more about Toni Hansen and the educational services she provides through her website at http://www.tonihansen.com.Market Snapshot for July 9, 2012 (12:32 am ET).