Friends
Stocks had another very difficult day, as a quiet morning once again turned into an ugly afternoon. After a decent initial unemployment claims number this morning followed by slightly better housing starts and building permits, not to mention an ok Philly Fed number, one might have expected that the continuing improving domestic economic picture might have put a bid in for stocks. Well, no. By the end of the day, the Dow Jones Industrial Average was down 134 points to finish the day at 11,770. The S&P 500 was down 20 points to close at 1216. Gold took a shellacking, down $55 for the day to finish near the $1718 level. At least oil joined in the carnage today dropping $3.50 to finish near the $99 area.
We have done some technical damage this week in the S&P as we were dancing right around 1257, only to plunge toward serious support levels near 1216 and then 1205. We had been forming the dreaded triangle configuration (lows and highs had been narrowing) indicating that we were about to break out one way or the other. The break was to the downside, at least for this week, and now the bulls have to gather their forces should they still have designs on a Santa Claus rally. Of course, we continue to watch government bond auctions in Europe (last night’s Spanish auction was not good) to gauge fear in the Eurozone. If sovereigns continue to have difficulty selling their bonds, and rates have to continuously rise, it is going to be a very big problem, very quickly.
Here at home, we have good corporate earnings, a slightly better employment picture, and decent economic numbers coming in daily, but we still have to deal every day with what is happening in Europe and the expectation that the “super committee” in our Congress is about to lay an egg. So far this week, fear is winning and domestic economic improvement is taking a back seat. We’ll see if the negativity continues to overwhelm the bulls, or will we get some relief soon so that Santa can deliver us a nice holiday rally.
Stay tuned. Have a nice evening everyone.
