9:00am (EST)
The bears were throwing a lot of chips into the pot on Monday as they tried to up the ante on a possible Greece, and soon to be Portugal, debt default. The bulls took all day to call but by the end of the session they matched the bet as the market finished flat.
Given the plunge of 1% at the open, it was a victory for the bulls as they held support and nearly pulled off a great comeback by the closing bell. We had a sly grin on our face when we read where one Wall Streeter, who was head honcho for the firm’s “equity division”, said the U.S. appears to be “slowly, slowly in the early stages of decoupling from the eurozone.”
Duh…We told our subscribers this back in early December, Gus. Of course, we would never name names but where has this guy been? We were hoping to see a lift once the European markets closed, which happens at 11:30am (EST) our time, and the late rally back to even got legs once buyers stepped in after lunch.
The Dow fell a half-dozen points, or 0.1%, to finish at 12,653. The blue-chips traded to a low of 12,529 at the open but came within a point of cracking positive territory. We mentioned support yesterday and 12,550 was the test for much of the morning which we said to watch for. Upside resistance remains at 12,800.
The S&P slipped 3 points, or 0.3%, to end at 1,313. The index traded to a low of 1,300.49 but held support and came within spitting distance (0.17 points) of hitting green. Watch the same levels as yesterday for today.
The Nasdaq declined 4 points, or 0.2%, to settle at 2,811. We talked about some of Tech’s strength yesterday and the index actually managed a trip into positive territory (0.30 points) before the closing bell.
Today is the end of the month and January has been good to us as the indexes are showing some fat gains for the year. The Dow is up nearly 4%, the S&P is up nearly 5%, and the Nasdaq and Russell 2000 are showing 8% pops to start 2012.
The talking heads were being Negative Nancy’s yesterday and were shocked to see the turnaround but don’t be surprised to see them mention the “January Barometer” today. The indicator has a history of being fairly accurate and goes by the theory that when the month of January is higher, the market will end higher for the year. If negative, the indexes usually post a decline.
Unless the wheels fall off the bull wagon today, the bulls will likely appreciate the following facts since the 50’s. If the Dow ends January higher, the blue-chips have over an 80% chance of finishing higher for the year with additional gains of nearly 10%, on average. Wow, let’s hope so, right?
Of course, there is a ton of time between now and Christmas and we don’t expect this smooth of a ride all year long.
Subscribers, please hit the Members Area to get the trade updates and stay on your toes on a possible way to play Facebook, which could announce its IPO on Wednesday. We have 2 trades on our Watch List that could do well and we are in the office huddle deciding on if we should make one or both official recommendations or not. We want to see how shares open but the options pits were exploding on these names yesterday. Stay locked-and-loaded and look for a possible New Trade Alert shortly after the open if we take action.
As we head to press, futures look like this: Dow (+54), S&P (+6), Nasdaq (+10).
