On 12/24/11, Saturday, Christmas Eve, the last day of consumer shopping occurs in front of the holiday.
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On 12/26/11, Monday, U.S. equities markets are closed for the Christmas holiday.
On 12/27/11, Tuesday, semiconductors are weak which weaken the broad markets.
On 12/28/11, Wednesday, the euro loses the 130 level (XEU) and the U.S. equities markets sell off. The euro is now at an 11-month low against the greenback. Traders worry about the Italy bond auctions occurring tomorrow. The holiday low volumes exaggerate the market moves. The SPX ends the day down 16 points, or 1.3%. The Dow Industrials close down 140 points, or 1.1%.
On 12/29/11, Thursday, the Italy bond auctions are uneventful so the U. S. futures are green. Markets rally with the SPX regaining the starting year number at 1257.64. The Italy 10-year yield moves back above 7%. The France 10-year yield moves back above 3.1%. The equities markets finish the day gaining back Wednesday’s losses.
On 12/30/11, Friday, the last trading day of the year, the markets move sideways with the SPX positive on the year—until the last five minutes of trading where the SPX drops to close at 1257.60, four pennies lower than the starting year number. The SPX finishes the year dead even, from 1258 to 1258, 0% return. The Dow Industrials moved from 11578 to 12218 during 2011, a gain of 640 points, or 5.5%. Traders are chasing the dividend stocks as seen by the Dow’s performance. The Nasdaq went from 2653 to 2605 losing 48 points, or down 1.8% for 2011. Broad markets have limited upside if technology is moving in reverse. The small cap Russell 2000 went from 784 to 741, down 43 points, or down 5.5%. Note how the small caps were hit proportionally larger as would be expected during weak economic times. Small caps rally stronger in good economic times. Thus, mixed markets in 2011 with money chasing perceived safety in blue chip divvy stocks with the Dow up 5.5%. The broader SPX flat lined for the year while technology not meet the constant media hype, the Nasdaq down 2%. Small caps receive a harder beating as money moves out of the riskier speculative stocks, the RUT down 5.5%.
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On 1/3/12, Tuesday, the first day of trading for 2012 is underway……..
……………………the saga continues…………..
Looking ahead,
Watch the European bond market, especially Italy and France 10-year yields. Use the Italy 7%, Spain 6% and France 3.3%-ish level as a signal of trouble. Italy ventured above 7% again and France is above 3.1% again. Listen for the pending S&P downgrade of France debt occurring at any time over the next couple weeks. One-notch downgrade is priced in but not a two-notch downgrade or other bad news from S&P.
Global recovery is stalling. China real estate bubble is popping.
On 1/3/12, markets begin trading again. ISM Manufacturing 10 AM, watch the energy markets. Construction Spending 10 AM, a great indicator for employment. FOMC Meeting Minutes 2 PM.
On 1/4/12, Challenger Job Report 7:30 AM kicks off the jobs circus into Friday morning. Factory Orders 10 AM.
On 1/5/12, ADP Employment 8:15 AM. Jobless Claims 8:30 AM. ISM Non-Mfg 10 AM. Natty Inventories 10:30 AM. Oil Inventories 11 AM (delayed one day due to holiday).
On 1/6/12, Jobs Report Friday, the circus is back in town.
On 1/12/12, ECB rate decision and press conference, more rate cuts.
On 1/16/12, markets are closed for Dr. Martin Luther King Day.
On 1/20/12, E.U. Summit (tentative scheduling, these dates are a moving target).
On 1/24/12 and 1/25/12, Fed rate decision and press conference.
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