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Stock Market Overall Solid Week

Stock-Markets / Stock Markets 2012 Jan 05, 2013 - 07:57 AM GMT

By: Jack_Steiman


A week of wild events led first and foremost by the fiscal-cliff drama that literally came down to the final moments. If no deal had been worked out on New Year's Day this market would have taken it on the chin very hard. The Republicans were adamant that they would not accept a deal that wasn't inclusive of major spending cuts. That's exactly what the Democrats didn't offer. Didn't look good, but at the last moment the Republicans gave in stating they were concerned about the state of the markets considering how on the edge our economy is right now. They gave in and the deal was signed into law by President Obama. The market celebrated in a very large way to the tune of 300+ points on the Dow and nearly one hundred points on the Nasdaq. It was quite the day, which also set things up more bullish on the daily charts, but more on that later on in this report.

The bears essentially gave up while the bulls celebrated. The big loser in all of this was gold and silver, which lost some of the fear-trade nonsense that has been going on for many years. A little more certainty can go a long way these days for the markets, but not for gold and silver. Bottom line was it was a solid week for equities with the transports, financials, and technology leading the way. Even Apple Inc. (AAPL) did well this week despite a few terrible days at the end of the week.

The good news technically for the bulls was the way the index charts broke out of long-term bases, a clearing of trend lines that make the index daily charts more bullish in nature. Now the pullbacks can be supported by those trend lines, which will now act as a buffer for any selling, unless, of course, we get some terrible, unexpected news from somewhere else. However, for now, the markets are set up with a buffer underneath. That should keep the bears on the defensive overall. Add in solid volume on the move up and things look quite decent for the bulls bigger picture. At least it does for now. Longer-term, as long as the long-term up-trend line off the March 2009 lows hold, currently at approximately 1350, the market remains bullish. That's right. We could pull back over 100 S&P 500 points and it still would NOT be bearish bigger picture. The action for this week was bringing the market into a far more favorable trend for the short, and hopefully, mid-term, if not longer.

We had a Jobs Report today that seemed to almost go unnoticed. Folks are worn out from dealing with the headaches and anxiety brought about by the fiscal cliff. The Jobs Report wasn't great. Slightly below expectations, especially after the ADP Report came in better than expected earlier in the week. We also had the ISM Manufacturing Report this week that also seemed to be a nonevent when it usually is the most important report of each month. That report came in as expected and slightly above growth. Nothing great from either report, but nothing really bearish either. Next month you'll see folks pay far more attention to them. They basically drew a pass for this month and we're all happy about that. In the months ahead they'll need to show improvement if the market is to continue appreciably higher. The economy is barely holding on but at least it's doing that. For now, anyway.

There's one last thing to talk about that's very important to the future of our economy and possibly the stock market. The fed minutes were released yesterday. A majority of the governors said that at the end of this year they will need to pull the plug on free QE money being supplied to the markets in fear of runaway inflation as we're seeing with the price of health care, food, and much more. I'm sure you've all noticed the changes in costs. Annoying and out of control on many levels. The announcement of that did hit some of the commodity world, mostly in gold and silver. So we need to pay attention to this going forward. A lot is being ignored for now based on the stress the fiscal cliff brought on recently.
In time we'll need to follow the pulse of the market to gain deeper insight as to what this will mean.



Jack Steiman is author of ( ). Former columnist for, Jack is renowned for calling major shifts in the market, including the market bottom in mid-2002 and the market top in October 2007.

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© 2012

Mr. Steiman's commentaries and index analysis represent his own opinions and should not be relied upon for purposes of effecting securities transactions or other investing strategies, nor should they be construed as an offer or solicitation of an offer to sell or buy any security. You should not interpret Mr. Steiman's opinions as constituting investment advice. Trades mentioned on the site are hypothetical, not actual, positions.

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