FRIDAY'S MARKET WRAP-UP
Market Snapshot for December 30, 2011 (12:06 a.m. ET, Dec. 30):
Closing Prices: DOW 12,217.56 (-69.48, -0.57%), S&P 500 1,257.60 (-5.42, -0.43%), NASDAQ 2,605.15 (-8.59, -0.33%), Nikkei 225 8,455.35 (+56.46, +0.67%), DAX 5,898.35 (+49.57, +0.85%), FTSE 5,572.28 (+5.51, +0.1%)
OIL 98.83, GOLD 1,5529, SILVER 27.915
EURO 1.2955, YEN 76.92, BRITISH POUND 1.5529, U.S. DOLLAR INDEX 80.52
And the Winner Is...It's a Tie!
The bulls and bears were involved in a fierce game of tug-of-war throughout most of this past year. In a battle that was often too close to call, the question of who would come out ahead... or behind... has finally been answered. When it came to the three major indices, however, the answer was different for each one. The Dow Jones Ind. Ave. ($DJI) finished the year higher by 5.5%, the S&P 500 ($SPX) was virtually flat, and the Nasdaq Composite ($COMPX) was down 1.8%.
In truth, it wasn't been so much of a rivalry as it was a test of who could stand their ground and emerge relatively unscathed. Many of the indices abroad were not as lucky. China's Shanghai Composite Index ended the year lower by 21.7%, while France's CAC-40 was down 17.3%. Even Germany was hit hard with the Xetra Dax lower by 15%.
Dow Jones Industrial Average (Figure 1)
As we start the New Year, we are going to continue to see this struggle grab the headlines. The market is set to open higher on Tuesday thanks to positive data from China and Germany, but the economic woes of this past year are not going to be solved overnight... or anytime soon for that matter.
Although the market has performed quite well in light of things, in the U.S. this can largely be attributed to the fact that in comparison to Europe, the U.S. markets have looked quite peachy. And in many respects, things have been looking up. As companies cut spending, looking for ways to keep costs down, they've seen a decent overall earnings season.
Unfortunately, these victories have not been passed down. Spending cuts have meant leaner companies that have also cut labor costs, which have done nothing to help unemployment. And it's the middle class, who have seen most of their wealth wiped out in the housing fiasco, who are continuing to feel the greatest pressure. On Friday, it's expected that the unemployment rate will once again tick higher.
S&P 500 (Figure 2)
The Dow Jones Industrial Average ($DJI) ended the day on Friday with a loss of 69.48 points, or 0.57%, and closed at 12,217.56. Only seven of the Dow's thirty index components ended the session in the black. The strongest performers were Bank of America (BAC) (+1.83%) and Hewlett Packard (HPQ) (+0.55%). The weakest were IBM (IBM) (-1.24%), Intel (INTC) (-1.22%), and Boeing (BA) (-1.03%).
The Dow ended the year with a gain of 5.53%. Tee strongest performers for the year were McDonalds (MCD), IBM (IBM), and Pfizer (PFE). The weakest were Bank of America (BAC), Alcoa (AA), and Hewlett-Packard.
The S&P 500 ($SPX) finished the session with a loss of 5.42 points, or 0.43%, and closed at 1,257.60. The strongest individual percentage performers in the index were MetroPCS Communications (PCS) (+5.34%), Alpha Natural Resources (ANR) (+3.71%), and United States Steel Corp. (X) (+3.08%). The weakest were Sears Holdings Corp. (SHLD) (-3.4%), Leggett & Platt (LEG) (-3.23%), and Rowan Cos. Inc. (RDC) (-2.22%).
The S&P 500 ended the year flat. The strongest performers for the year were Cabot Oil & Gas (COG), El Paso (EP), and Intuitive Surgical (ISRG). The major losers were First Solar (FSLR), Monster Worldwide (MWW), and Alpha Natural Resources (ANR).
The Nasdaq Composite ($COMPX) ended the session lower by 8.59 points, or 0.33%, on Friday and it closed at 2,605.15. The strongest performers in the Nasdaq-100 ($NDX) Seagate Tech. (STX) (+3.47%), First Solar (FSLR) (+2.74%), and Baidu (BIDU) (+1.53%). Only six components posted a loss. The weakest were Sears Holdings Corp. (SHLD) (-3.4%), Fossil Inc. (FOSL) (-3.36%), and Ross Stores (ROST) (-2.12%).
The Nasdaq Composite ($COMPX) ended the year with a loss of 1.8%. It's 2011 winners were led by Intuitive Surgical (ISRG), Alexision Pharmaceuticals (ALXN), and Hansen Natural (HANS). The top decliners were Research In Motion (RIMM), First Solar (FSLR), and Netflix (NFLX).
Nasdaq Composite (Figure 3)
Busy Data Week Ahead
It was a rather unexciting week on the data front this past week, but that's about to change. Despite the shortened trading week, it's a busy one for economic reports. The biggie in the U.S. this week will be December's unemployment and nonfarm payrolls report on Friday, but a number of large retailers will be reporting their December sales this week as well. Those to watch on Thursday include Costco Wholesale (COST), Macy's (M), Nordstrom (JWN), and Target (TGT). These will be watched closely for signs of just how thrifty Americans have been this holiday season after a year of continued economic struggles.
Also out this week will be the Institute for Supply Management's Manufacturing Index and the Commerce Department's report on construction spending for December on Tuesday, as well as the FOMC minutes from the December 3 meeting of the Fed. December auto sales come out on Wednesday. The ISM nonmanufacturing index for December then follows on Thursday.
More Resistance Ahead!
As far as the technicals are concerned, Tuesday's upside breakout now places the next level of resistance at July's highs. The Dow is the closest to testing this level and this test will likely slow the upside. The S&P 500 is next. A test in that index should lead to an even greater daily to weekly correction. The same goes for the Nasdaq, which just broke out of a triangle on the daily time frame and whose July highs are comparable to those hit in lat October and early November.
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.