Global markets get positive start in new year.
Tuesday, January 3, 2012. 9.25 a.m. As I noted on Saturday’s blog, and weekend media replays of last year highlighted, last year was a difficult year for most investors, not only individual investors, but many professionals, including hedge funds, and famous names. Even Warren Buffett was down 24% at the October low, and ended the [...]

Tuesday, January 3, 2012. 9.25 a.m.

As I noted on Saturday’s blog, and weekend media replays of last year highlighted, last year was a difficult year for most investors, not only individual investors, but many professionals, including hedge funds, and famous names. Even Warren Buffett was down 24% at the October low, and ended the year still down 6%.

The volatility was brutal, day-to-day, week-to-week, and month-to-month. The unfavorable season correction had the S&P 500 down 20.1% at its October 3 low, on the edge of an official bear market. Many global markets, including Brazil, China, India, Hong Kong, etc. were in serious bear markets, down as much as 35% at their lows.

The prognostications for this year were (and still mostly are) scary; that the eurozone debt crisis will implode with defaults by Greece, Italy, and possibly Spain in the first quarter, resulting in massive bank failures and a recession in Europe that will drag the rest of the world, including the U.S., into a global recession, and the U.S. market into a bear market.

But the stock market, which is usually a better economic forecaster than any of the tools of economists, seems to be saying otherwise.

While economists use their favorite forecasting method (extending whatever has been the recent trend in a straight line into the future), global markets reversed off their lows even as the news worsened. The U.S. market reached it low for the year October 3, and has been in a rally since that has the Dow up 15% from that low, and closed it up 5.5% for the year.

And while one or two days is meaningless, markets have been positive to begin the new year, markets in Europe up yesterday, and again today, and Asian markets up last night in their first session of the new year. And futures this morning are pointing to the Dow being up 180 points or so, at least in the early going.

It will probably continue to pay off to let the market be the economic forecaster in 2012, to let the charts and technical indicators reveal the direction of money flows, support/resistance levels, etc., and warn of potential momentum reversals before they take place.

Another Industry Showing Signs of Recovery?

It’s been encouraging to see some signs that the housing industry, auto industry, manufacturing, consumer confidence, etc., have potentially bottomed.

But the big worry has remained, that banks are still on the ropes, under-capitalized, burdened with debt, new regulations cutting into their previous ability to make big profits from proprietary trading, and so on.

There were 140 bank failures in 2009, and 157 in 2010. Economists have been forecasting the numbers would continue to grow for two or three more years (again extending the recent trend into the future, thinking endless trends rather than cycles).

But what’s this? There were only 92 failures in 2011. The last two failures were the first in almost a month. Have the problems in the banking industry also potentially bottomed?

[weakbanks1]

To read my weekend newspaper column ‘2011 – A Year of Odd Global Market Divergences! Click here.

Subscribers to Street Smart Report: In addition to the charts and signals in the premium content area of this morning’s blog, there will be an in-depth updates, signals, and outlook update on the U.S. market tomorrow in the subscribers’ area of the Street Smart Report website.

Yesterday in European Markets.

European markets closed up yesterday to start off the new year.

Asian Markets Closed Up Last Night.

The DJ Asia-Pacific Index closed up 1.3%.

Some Asian markets, including Japan and China were closed for holidays.

Among individual markets that were open last night:

Australia closed up 1.1%. Hong Kong closed up 2.4%. India closed up 2.7%. Indonesia closed up 1.3%. New Zealand closed up 0.9%. South Korea closed up 2.7%. Thailand closed up 0.1%.

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Markets This Morning.

European markets are mostly up again this morning. The London FTSE is up 1.2%.  Germany’s DAX is up 0.9%. France’s CAC is down 0.6%.

Oil is surging up $2.34 a barrel at $101.19.

Gold is also surging up, up $25 an ounce at $1,591 an ounce.

This morning in the U.S. Market:

This will be an important holiday-shortened week for potential market-moving economic reports, including the ISM Mfg Index, Construction Spending, and Factory Orders, and culminating on Friday with The Big One!, the Labor Department’s Monthly Employment Report for December. To see the full list click here, and look at the left side of the page it takes you to.

Today’s reports will be the ISM Mfg Index, and Construction Spending, both of which will be released at 10 a.m. And the minutes of the Fed’s last FOMC meeting will be released at 2 p.m.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 200 points in the early going.

To read my weekend newspaper column ‘2011 – A Year of Odd Global Market Divergences! Click here.

Subscribers to Street Smart Report: In addition to the charts and signals in the premium content area of this morning’s blog, there will be an in-depth updates, signals, and outlook update on the U.S. market tomorrow in the subscribers’ area of the Street Smart Report website.

How are you doing? We can help, and at very reasonable cost! Street Smart Report Online provides an 8-page newsletter every 3 weeks, an in-depth 6 page interim update every Wednesday on our intermediate-term signals and recommended holdings, an in-depth 4-page ‘Gold, Bonds, Dollar’ update every 2 weeks, and special reports and hotline updates as needed. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 23nd year. As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.

I’ll be back Thursday morning with the regular Thursday morning post, at 9:25 a.m. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

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