Swing Trading Strategies & Stock Picks Since 2003

Weekly Market Commentary- (Feb 8-Feb 12)

DJIA Industrial Average

Open: 10005.43

High: 10184.85

Low: 9882.85

Close: 10099.14

Change: 93.71 (0.9%)  

RSI: 44.87

MACD:  -105.99

Strategy: The stock indices have been showing signs of tiring out and are showing a sell-off on all negative reports. Traders should wait for lower levels of a double bottom below 9800 before re-entering the markets.

Highlights of week:

·        U.S. stocks gained after a gap of five weeks on a small basis, mainly owing to the comfort provided to the participants following the assurance by some senior ministers from European countries, to pledge their support to Greece. Though the modus operandi has not yet been finalized, the same help helped the Dow Industrial Average index regain above 10000 points at the end of week, and ended with a gain of 0.9%. It also regained some lost glory in early half of the week, and the Standard & Poor’s 500 Index also gained this week by soaring 0.9% in the week to around 1075 points.

·        The rally in the volatile week in the first half of the week was led by news that European Union would bail out the deficit some euro-zone countries including Greece, whose details would be finalized in the coming week.

·        After touching $82 earlier earlier in the last year, crude oil  started gaining yet again after retracing to sub-$70 per barrel at one stage, to a level of around $73 per barrel for the March futures.

·        The Dollar Index remained stable for a major part of the week, and the same ended the week at a level of around 80.30, due to strengthening of US $ against Euro.

·        Gold started to gain yet again this week, and closed the week at a level of $1090 per ounce for April deliveries.

·        Motorola announced its plans to split the company into two parts with one business catering for mobile sets production, and the new listed entity going for cable business operations.

·        Warren Buffet owned Berkshire Hathaway managed to officially clinch the deal for acquisition of the railroad company Burlington Northern investors. The deal was valued at $100 a share. 

·        Toyota Motor Corp. is considering longer warranties and cash discounts to woo U.S. consumers after recalls that forced the automaker to halt sales of eight models.

·        Retail purchases increased 0.5 percent, the third gain in the past four months, Commerce Department figures showed today in Washington.

·        Reuters/University of Michigan’s consumer sentiment gauge dropped to 73.7 from 74.4 the prior month.

·        The encouraging indicator which came out this week was that initial jobless filings for the week came down to 440000, from around 484000 such filings in the previous week.

·        The late week slump in the Wall Street was mainly led by the tighter lending rates policy adopted by China.

·        Commodities continued to remain weak including most of the non-ferrous metals like copper and aluminum.

·        Some stocks like Caterpillar, Aloca and few others remained in demand for a major part of the week.

·        Airline stock also started gaining this week, apart from material stocks and energy stocks. Financials kept fluctuating in the week.

The Weekly Commentary

This was also one of the volatile weeks in US stock markets, pegged by sovereign debt problem issue in Europe, which looked like settling. The EU countries pledged their support to the countries like Greece or some other countries, but deferred the plan to do so for the coming week.

US benchmark index Dow Industrial Average closed the week with gains of 93.71 points, or 0.9%. S&P Index also gained around 0.9% in the week.

China issue regarding the tightening of credit lending policy also came into focus late in the week, leading to a sharp fall in the markets on Friday.

The initial jobless claims for the week dropped to 440000 from 484000 in the previous week.

The retail sales for the January picked up marginally by 0.5%, but the dampener was the fact that consumer sentiment for the month.

Airgas Inc. refused the acquisition offer from Air Product Inc. However, the latter made a hostile offer directly to the investors of the company for a parallel offer.

Warren Buffet controlled Berkshire Hathaway completed the deal to acquire railroad company Burlington Northern was given an approval by its investors.

Motorola announced its plans to split the company into two parts with one business catering for mobile sets production, and the new listed entity going for cable business operations.

Gold gained yet again in the week to close at a level of $1090 per ounce for April deliveries. The crude oil also remained stable around $74 per barrel for March deliveries.

The Dollar Index continued to remain stable in the week, and closed at a level of 80.30 following its continued strength against Euro.

The coming week would be a holiday shortened week, after a long weekend in US.

The Week Ahead

Tuesday: Housing Market Index for February

Wednesday: Import-Export Prices for January.

ICSC-Goldman Sachs Store Sales

FOMC Minutes

Industrial Production for January

Treasury Budget

Thursday: The Labor Department's weekly jobless claims report

Production Price Index

EIA Natural Gas report

Friday:  Consumer Price Index for January