Swing Trading Strategies & Stock Picks Since 2003

Dow Industrial Average

Key Statistics: Dec 24

Open: 10467.12

High: 10522.06

Low: 10461.68

Close: 10520.10

Change: 54.03 (+0.51%)

RSI: 59.34

MACD: 68.03

Snapshot:

• Dow ended with modest gains after half a day’s trading session on Thursday on eve of a long weekend, and closed at the day’s high at 10520 points, with a gain of around 54.03 points, or 0.51%, led by positive movements in most of the Dow constituents, which ended with reasonable gains.  As earlier, Nasdaq Composite index also ended with a little higher gains of around 16.05 points, or 0.71% gains at a level of 2285 points in the truncated session. S&P also scaled to a new 2009 high of 1126.48 points, with a gain of little over 6 points, or 0.53%.

• With Thursday’s gains, Dow Industrial Average Index ended at the highest closing of the year till date.

• The first time jobless filings slipped to lower than expected mark of 4,50,000. The same indicates some sense of recovery in US market.
• Durable goods orders for the previous month recorded a higher number, apart from auto sector, by recording a 0.2% gain on a month on month basis.
• Technology stocks continue to lead the recovery in the US stock market, led by Apple Inc.
• Crude oil continues to gain in commodity markets, and gained by 58 cents to $77.25 per barrel. This is the second running day for which crude oil kept gaining, after the inventory report.

·       Gold continued to show signs of some revival and ended the session at even higher level around $1105 for February delivery.

• Dow index constituents like materials, energy ended up the session with some gains of 1.5% and 0.5% on Wednesday, with a few other sectors paring some of the gains made earlier the week.

·         Volumes remained low in the session, in light of the short session, and the holiday season ahead.

·         US $ remained mixed during the session, with same showing signs of tiring out against Euro, and gaining against Japanese Yen and GBP.

Strategy

Traders and investors should remain cautious, and should take long positions only strong signals on stock specific basis. Market is facing some signs of consolidating around the level, before taking a fresh direction.

Market Commentary

Wednesday saw a listless session in which the volumes were not high on either NYSE or NASDAQ, and stocks remained flat for a major part of the day.

Dow Index ended at the highest closing for December, at 10466.13 points, with a very nominal gain of around 1.51 points at 10466.44 points or 0.01%. Nasdaq Composite index also ended the session with very small gain of 16.75 points, or almost 0.75%. S&P also scaled to a new 15 months closing of 1120.59 points.

Amongst the Dow constituents, 27 stocks ended up the day with small to reasonable gains and another 3 stocks ended the session with some losses.

Energy sector, technology and materials sector were the main sectors which were in demand on Thursday. Even in case of non index stocks from financials sector, active stocks like Citigroup ended up by regaining some ground. DELL and Cisco were some of the other stocks to gain limelight.

Out of the main gainers from Dow constituents, Alcoa Inc. with 2.12%, Intel Corp. with 1.14%, Du Pont with 1.09% and Boeing with 0.95% logged the maximum gains. Alcoa Inc. and Du Pont remained the favorites for the second consecutive day.

Amongst the losers, there were only three Dow constituents and Merck Inc. with 0.7% and Walt Disney with 0.43% losses were the major losers. Amongst these stocks, Merck pared 0.7% despite the approval to US healthcare bill by Senate.

Amongst the healthcare companies, Humana, Wellpoint and Aetna retraced during the Thursday’s session, after having gained in anticipation of healthcare bill. Profit booking in these stocks came as a “sell on news”.  

Even financials like American Express and Bank of America were back in gainers list after some gap on Thursday.

Crude oil gained grounds after release of inventory data to $77.25.

Gold also finished at a higher level of $1104 for February delivery, as the US $ remained mixed.

The Day Ahead

After a Christmas break, Fed balance sheet is due for release on Monday.