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Stock Market Outlook for February 11, 2013

Todays_Markets

Upcoming US Events for Today:

  • Ne Events Scheduled for Today

 

Upcoming International Events for Today:

  1. Euro-Area Finance Ministers meet in Brussels at 8:30am EST.

 

Recap of Friday’s Economic Events:

Event Actual Forecast Previous
CNY Imports (YoY) 28.80% 23.50% 6.00%
CNY Exports (YoY) 25.00% 17.50% 14.10%
CNY Trade Balance (USD) $29.15B $24.70B $31.62B
JPY Eco Watchers Survey: Outlook 56.5 52 51
JPY Eco Watchers Survey: Current 49.5 48 45.8
CNY Consumer Price Index (YoY) 2.00% 2.00% 2.50%
CNY Producer Price Index (YoY) -1.60% -1.60% -1.90%
CHF Unemployment Rate 3.40% 3.40% 3.30%
CHF Unemployment Rate s.a. 3.10% 3.10% 3.10%
EUR German Trade Balance (euros) 12.0B 15.0B 16.9B
EUR German Current Account (euros) 17.3B 17.5B 16.2B
EUR German Exports s.a. (MoM) 0.30% 1.40% -2.20%
EUR German Imports s.a. (MoM) -1.30% 1.60% -3.80%
EUR Bank of France Business Sentiment 95 93 94
EUR Italian Industrial Production s.a. (MoM) 0.40% 0.30% -1.10%
EUR Italian Industrial Production n.s.a. (YoY) -9.30% -7.30% -7.70%
EUR Italian Industrial Production w.d.a. (YoY) -6.60% -6.90% -7.70%
CAD Housing Starts 160.6K 195.0K 197.1K
CAD Unemployment Rate 7.00% 7.20% 7.10%
CAD International Merchandise Trade (Canadian dollar) -0.90B -1.45B -1.67B
USD Trade Balance -$38.5B -$46.0B -$48.6B
CAD Part Time Employment Change -1.4   -1.4
CAD Participation Rate 66.6   66.8
CAD Net Change in Employment -21.9K 5.0K 31.2K
CAD Full Time Employment Change -20.6   41.2
USD Wholesale Inventories -0.10% 0.40% 0.40%

 

The Markets

Equity markets gained on Friday, fueled by strength in the Technology sector as shares of Apple attempted to rebound from the recent 52-week low.  The tech titan is said to consider ways to return cash to shareholders as the company addresses investor concerns that the $137 Billion in cash is excessive for regular operations.  Apple stock rose 1.44%, pushing the NASDAQ Composite higher for the week and against a significant level of resistance at 3197.   The NASDAQ is one of the few benchmarks that have yet to achieve new 52-week highs as the underperformance of the technology sector, particularly Apple, act as a drag on the market.

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While the NASDAQ pushed up against resistance near a mutli-year high, the S&P charted a new 5-year high, breaking resistance at 1515 on Friday.   The index traded above this level throughout the session, suggesting a level of support at this previous resistance.   The gains on Friday came upon a low volume session as trading activity was subdued as a result of the winter storm hitting the US North-East.

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The Dow Jones Industrial Average, which is less influenced by activity in the Technology sector, failed to overcome resistance at 14,000.   Over the past couple of weeks the benchmark has traded within a tight range, bound by support at 13,860 and resistance at 14,020. 

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The activity of the US Dollar Index has certainly proved to be a hindrance on equity and commodity market activity over recent sessions.   The US currency bounced off a level of support at 79.00 and is now pushing against a declining level of resistance around 80.30.   It remains unclear which direction this consolidation pattern will break, however, risk-on sentiment amongst investors could continue pressuring the dollar lower, charting what may be a bearish descending triangle pattern, a setup that targets down to 76.50 upon a breakdown through support at 79.00.   The chart warrants close attention as the impact on the equity and commodity market resulting from a break in the US dollar in either direction is almost guaranteed.   The US Dollar index is seasonally positive during the first quarter of the year as companies seek to repatriate international cash and higher treasury rates increase demand for the domestic currency.

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FUTURE_DX1

Companies reporting earnings today include Loews, Choice Hotels, Comstock Resources, Dun & Bradstreet, and Forward Air. 

L CHH CRK DNB FWRD

Sentiment on Friday, as gauged by the put-call ratio, ended bullish at 0.90.   Last week the ratio broke above a declining trendline, hinting of a switch of sentiment from that of optimism to caution.   Even though the shift in sentiment is suggestive of a change in trend in the equity markets, the excessive caution at the current market peak gives reason to suggest that downside risks are limited as investors protect portfolios at the present market peak.   Typically, an early warning signal of an abrupt correction at a market peak occurs when sentiment reaches euphoria as investors become complacent of the risks.   We clearly do not have that scenario as option activity suggests otherwise.

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S&P 500 Index

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Chart Courtesy of StockCharts.com

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TSE Composite

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Chart Courtesy of StockCharts.com

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Horizons Seasonal Rotation ETF (TSX:HAC)

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2013 Year-to-Date Since Inception (Nov 19, 2009)
HAC.TO 5.50% 34.2%

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