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Monday, February 8, 2010. 9:15 am.

The major banks are beginning to hire again, not in their banking and lending operations, but in their brokerage and investment arms.

Bank of America announced last week it will be hiring 2,000 new stock-brokers at its Merrill Lynch division. The bank said it will not get involved in trying to hire experienced but highly paid brokers from competitors. It will be hiring 2,000 broker trainees.

Deutsche Bank announced over the weekend that it will aggressively expand its equity market business in Asia, part of its plans to expand its key European business units globally. Deutsche Bank is one of Europe’s most active banks in foreign exchange and derivatives trading. The bank’s CEO did not specify hiring numbers, saying it “will acquire the talent we need in must–win areas”

Ah, yes, the lessons have been learned this time. We won’t have to worry any more about the previous problems of banks being too big to fail, and involved in so many facets of the financial system that the failure of one could lead to the failure of many, and collapse of the global financial system.

Asian markets were mostly down again last night.

But the moves were smaller than over recent days and weeks, and some markets closed up for the session.

The DJ Asia-Pacific Index closed down 0.6%.

Among individual countries:

Australia closed up 0.1%. China closed down 0.1%.  Hong Kong closed down 0.6%. India closed up 0.1%. Indonesia closed down 1.7%. Japan closed down 1.0%. Singapore closed up 0.4%. South Korea closed down 0.9%. Taiwan closed up 0.1%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

Markets this morning.

European markets are mixed but up on average of about 0.3%.

Oil is up fractionally, $.15 a barrel at 71.34 at the moment.

Gold is down $1 an ounce at $1,065 at the moment.

Markets in the U.S.

This week there will be very few potential market-moving economic reports. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

And the 4th quarter earnings reporting period will be winding down.

That will leave the market trading primarily on its new worries of potential debt crisis in global economies, in various government owned sovereign wealth funds, emerging markets, the time table for removing stimulus efforts, economic growth for the rest of the year, etc. That should be enough fodder to create continued up and down volatility.

Our pre-open indicators this morning are fractionally negative, pointing to the Dow being down 10 points or so in the early going, meaningless as to direction for the day.

Stock Market Patterns.

The next weekly pattern is that this is the week before this month’s options expirations week, and the week before tends to be negative. However, with the market so short-term oversold that is in question. (see chart of the morning from Saturday’s post)

Interesting Charts of the Morning.

The strength in commodities on expectation of continuing economic recovery has gone away at least temporarily.

The short-term 21-day moving averages have, as usual, continued to be as important on the downside as they previously were on the upside, now overhead resistance on rally attempts, as they were previously support on pullbacks.

Oversold short-term enough to produce at least another rally back up to the m.a.?

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Can Corrections Be Better Than Rallies?’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Saturday, February 6th, 2010. 9:30 am.

I worry about the extreme political polarization in the U.S. that has the country so divided that we are rapidly becoming a nation of political enemies, civilized enemies but enemies nonetheless. The divide is becoming as serious as the divisions between warring religious factions in Iraq, or bitter divisions in other deeply troubled countries, where citizens are so focused on their differences, usually political or religious, sometimes both, that they cannot get anything done in any area of their country’s future that requires cooperation or compromise between those of different persuasions.

Is it only under the threat of military disasters that we can become one nation, all just Americans, with one goal? Can we not also do so under the threat of economic ruin? Apparently not.

I worry about that, with so many very critical decisions to be made in coming months, regarding for instance; when, if, and how to begin removing the government stimulus efforts (which were initiated by both political parties during their Administrations); how to handle the massive deficits; the growing economic dominance of China; and on and on.

The best decisions will not come out of bitter fighting, with the goal being who will come out ahead in the next election, which seems to currently be driving the efforts of both sides, but will come out of putting the best minds together from both sides toward an entirely different goal, what’s best for the whole country.

I worry, because I don’t see that as likely.

But it is not just the politicians who are to blame. They are heavily influenced by the bitter polarization of the people they represent.

Yesterday in the U.S. stock market.

A few weeks ago I warned that volatility was due to return after having been absent for several calming months during which the Dow was trading only 75 points or so between its intraday high and low, and usually closing in the middle of the range.

Over the last three weeks it’s been trading in an intraday range of 150 to 250 points, and frequently closing at the low of the day.

Yesterday saw similar volatility, with the Dow trading in a range of 200 points, down as much as 170 points late in the day, breaking it through two psychological support levels, 10,000 and 9,900, to a low of 9,835, which had traders sweating and fearing a collapse. But buy programs flooded in beginning at 2 o’clock, to recover it to a fractionally positive close for the weekend.

Volume picked up to almost 1.6 billion shares traded on the NYSE in the volatility.

Yesterday’s intraday chart:

The Dow closed up 10 points, or 0.1%. The S&P 500 closed up 0.3%. The NYSE Composite closed down 0.1%. The Nasdaq closed up 0.7%. The Russell 2000 closed up 0.5%%. The DJ Transportation Avg. closed up 0.2%.

Global markets for the week.

Again this week, not much green anywhere. And once again global markets were more negative than the U.S. market.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

What’s next for the market?

Next week there will be very few potential market-moving economic reports. To see the full schedule of next week’s reports click here, and look at the left side of the page it takes you to.

And the 4th quarter earnings reporting period will be winding down.

That will leave the market trading primarily on its new worries of potential debt crisis in global economies, in various government owned sovereign wealth funds, emerging markets, the time table for removing stimulus efforts, economic growth for the rest of the year, etc. That should be enough fodder to create continued up and down volatility.

Stock Market Patterns.

The next weekly pattern is that next week is the week before this month’s options expirations, and the week before tends to be negative. However, with the market so short-term oversold that is in question. (see chart of the morning below).

Interesting Charts of the Morning.

The market was made short-term oversold beneath its 21-day m.a. by the previous severe two week plunge to a degree that normally brings at least a short-term oversold rally back up to the m.a. And the market did attempt to do that.

But this week the rally attempt failed before it even reached the potential resistance at the m.a.  Yesterday was particularly worrisome to traders as the Dow’s additional plunge of 170 points in the first half of the day from an already very oversold level had it take on the appearance of a potential collapse. If it closed down like that in front of the weekend it may have brought panic selling on Monday and Tuesday when investors got home and had time to look at their charts and portfolios.

But the extreme oversold condition had short-sellers taking profits at least temporarily, and buy programs coming in from the big program-trading firms.

That rescued the market, at least for the day. And left it still quite oversold short-term beneath its 21-day m.a. This a bar chart. So the lowest point on the chart is the low for the day yesterday. We’ve marked the close with a short line to make it more clear.

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my weekend newspaper column ‘Can Corrections Be Better Than Rallies?’ click here!

I’ll be back Monday a.m. after a look at events over the weekend, Asian markets Sunday night, and early morning indicators for Monday.

SUBSCRIBERS: There is another Special Report and hotline on your website from yesterday.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Friday, February 5, 2010. 9:15 am.

The Labor Department’s much anticipated employment report for January was released this morning. It had both positive and negative aspects. There were 22,000 additional jobs lost in January, compared to the consensus forecast that 25,000 new jobs would be created. But the unemployment rate fell to 9.7% in January from 10% in December compared to the consensus forecast that it would rise to 10.1%.

The usual revisions for previous periods at the beginning of a new year were significant.

Jobs losses in December were considerably worse than were reported a month ago, revised to a loss of 150,000 jobs from the previously reported loss of 85,000 jobs.

Last year’s total job losses were revised to 600,000 more than previously reported and revised through the year. 

However, it was still obvious that the employment picture improved substantially in the last half of 2009, from job losses of as many as 500,000 a month in the first half.

And November’s numbers were revised to show that 64,000 new jobs were added in November, rather then the report two months ago that only 4,000 new jobs were created.

The revisions are a reminder that the jobs numbers are volatile, and what is reported one month can be dramatically revised a month or two later.

Yesterday in the U.S. Market.

The biggest one-day decline since last April, with several support levels broken. Another pick-up in volume on a down day, with 1.5 billion shares traded on the NYSE. And another day when the market ended on its low.

Yesterday’s intraday chart:

The Dow closed down 268 points, or 2.6%. The S&P 500 closed down 3.1%. The NYSE Composite closed down 3.6%. The Nasdaq closed down 3.0%. The Russell 2000 closed down 3.4%. The DJ Transportation Avg. closed down 3.1%.

The bottom literally fell out of gold, which came off of its intraday low before the close, but still closed down $46 points at $1,063 an ounce.

Two safe havens: The U.S. dollar, and U.S. Treasury Bonds. We recently moved 40% of our Market-Timing Strategy portfolio into ETF’s on those two markets, and they closed up 0.6% and 1.6% respectively in yesterday’s down market. 

Asian markets also plunged last night.

The DJ Asia-Pacific Index plunged 2.5%

Among individual countries:

Australia closed down 2.4%. China closed down 1.9%.  Hong Kong closed down 3.3%. India closed down 2.7%. Indonesia closed down 2.9%. Japan closed down 2.9%. Singapore closed down 2.2%. South Korea closed down 3.1%. Taiwan closed down 4.3%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: Sorry to be giving you so much reading to pay attention to lately but it’s been important, beginning with last weekend’s Special Report on gold and the stock market, an in-depth Market Signals and Recommendations update from Wednesday, another in-depth Gold, Bonds, Dollar update from yesterday, as well as hotline updates from Monday, Wednesday, and last evening.

Markets this morning.

European markets are off earlier lows since the U.S. jobs report was released, but are still down quite sharply, on average of 1%.

Oil is up $.42 a barrel at 73.52 at the moment.

Gold is off earlier lows, but down $4 at $1,159, and down $26 an ounce for the week so far.

Markets in the U.S.

This week’s fairly heavy schedule of potential market-moving economic reports ends today.

To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

The Labor Department just released what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. (details at the top of the post).

Previously negative pre-open indicators have turned somewhat positive after the report.

Our pre-open indicators this morning are now pointing to the Dow being up 15 points or so in the early going.

But can the jobs report overcome the latest worries for more than a few hours?

Stock Market Patterns.

The ‘monthly strength period’ was due to end yesterday.

The next weekly pattern is that next week is the week before this month’s options expirations week, and the week before tends to be negative.

Interesting Charts of the Morning.

I’m sorry but again I don’t have time to provide interesting charts of the day this morning. Too much to do for subscribers.

Please scroll down to recent ‘Interesting Charts of the Morning’ and commentary.

SUBSCRIBERS: Sorry to be giving you so much reading to pay attention to lately but it’s been important, beginning with last weekend’s Special Report on gold and the stock market, an in-depth Market Signals and Recommendations update from Wednesday, another in-depth Gold, Bonds, Dollar update from yesterday, as well as hotline updates from Monday, Wednesday, and last evening.

To read my newspaper column from last weekend ‘Is This as Good As It’s Going to Get?’ click here! It will be replaced with this weekend’s column late today or tomorrow morning.

NOTE: Although tomorrow is Saturday and markets are closed, I will be back in the morning with a wrap-up of today’s market action, and the week’s, and an outlook for Monday and next week.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Thursday, February 4, 2010. 9:15 am.

The market is getting the strong 4th quarter earnings it was hoping for, but hasn’t been able to rally in response. In fact the heaviest selling has come in the stocks of companies that have been reporting the best positive earnings surprises.

The jobs picture is mixed. A better ADP jobs report yesterday than expected, but an unexpected jump in unemployment claims last week has stock futures down this morning.

The Investors Intelligence sentiment index is at an extreme of bullishness usually seen near market tops. But the equally predictive poll of its members by the American Association of Individual Investors last night showed only 29.2% bullish, and 43.1% bearish, far from the more than 55% bullish usually seen at market tops.

How to sort it all out, given that we expect a serious correction sometime in 2010, and then a typical huge rally off that low in the 2ns year of this Presidential cycle?

As long-time subscribers know, we don’t think you can determine when either is beginning by analyzing the surrounding conditions and all the opposing opinions of what they mean. We believe the best, if not only way is to pay attention to the intermediate to longer-term technical indicators, and their buy and sell signals.

Yesterday in the U.S. Market.

A low volatility, sideways, going nowhere day. The Dow traded in a narrow 75 point range between its low and high all day, with the market closing mostly down.

Yesterday’s intraday chart:

The Dow closed down 26 points, or 0.3%. The S&P 500 closed down 0.5%. The NYSE Composite closed down 0.8%. The Nasdaq closed up 0.1%. The Russell 2000 closed down 0.6%. The DJ Transportation Avg. closed down 1.3%.

Asian markets closed down last night.

Among individual countries:

Australia closed down 0.6%. China closed down 0.3%.  Hong Kong closed down 1.8%. India closed down 1.6%. Indonesia closed down 0.4%. Japan closed down 0.5%. Singapore closed down 0.7%. South Korea closed down 0.1%. Taiwan closed down 0.1%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: There is an important mid-week in-depth Markets Signals and Recommendations update on your website from yesterday, and there will be a similar in-depth Gold, Bonds, Dollar, Inflation report on your website today.

Markets this morning.

European markets are down sharply this morning, on average of more than 1%.

Oil is down $.92 a barrel at 76.06 at the moment.

Gold is down $7 an ounce at $1,104, but still up $23 for the week so far.

The U.S. Dollar is up.

Markets in the U.S.

This week’s fairly heavy schedule of potential market-moving economic reports continues.

The schedule ends tomorrow with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a one to three-day triple-digit move in one direction or the other.

To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday’s economic report, the ADP Jobs Report, was an encouraging report, that only 22,000 jobs were lost in the private sector in January.

But this morning’s report of new unemployment claims, was a negative, that new claims rose by 8,000 to 480,000, the highest level since mid-December, considerably worse than forecasts that claims would fall 455,000.

Already negative pre-open indicators turned more negative in response to the report, and raise concerns about tomorrow morning’s big jobs report from the Labor Department.

Our pre-open indicators this morning are now quite negative, pointing to the Dow being down 70 points or so in the early going.

Stock Market Patterns.

The ‘monthly strength period’ was due to begin last Thursday, and to end today. The next weekly pattern is that next week is the week before this month’s options expirations week, and the week before tends to be negative.

Interesting Charts of the Morning.

I’m sorry but I don’t have time to provide interesting charts of the day this morning. Too much to do for subscribers.

Please scroll down to recent ‘Interesting Charts of the Morning’ and commentary.

SUBSCRIBERS: There is an important mid-week in-depth Markets Signals and Recommendations update on your website from yesterday, and there will be a similar in-depth Gold, Bonds, Dollar, Inflation report on your website today.

To read my newspaper column from last weekend ‘Is This as Good As It’s Going to Get?’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Wednesday, February 3, 2010. 9:15 am.

The first of this week’s two important jobs reports was released this morning, and presented an encouraging picture.

The ADP Employment Report was that only 22,000 jobs were lost in the private sector in January. It was the fewest number of monthly jobs losses since January 2008, 24 months ago, which was the last time the ADP report showed jobs being added in the private sector.

In addition, last month’s report that 84,000 jobs were lost in December was revised to only 61,000 jobs being lost.

The more important report will be the Bureau of Labor Statistics’ Employment Report, which includes federal, state, and local government jobs, and the unemployment rate, which will be released Friday morning. Economists are forecasting that report will show the jobs decline has ended, that it show 20,000 new jobs were created in January.

Yesterday in the U.S. Market.

Another triple-digit positive day right out of the gate. Volume picked up some, to 1.18 billion shares traded on the NYSE. The market was up from the open and closed on its high.

Once again the blue chips of the Dow and S&P 500 were more positive than the more speculative Nasdaq stocks, and the small stocks of the Russell 2000.

Yesterday’s intraday chart:

The Dow closed up 111 points, or 1.1%. The S&P 500 closed up 1.3%. The NYSE Composite closed up 1.3%. The Nasdaq closed up 0.9%. The Russell 2000 closed up 0.8%. The DJ Transportation Avg. closed up 0.8%.

Asian markets closed up sharply last night, following the U.S. rally.

Among individual countries:

Australia closed up 1.0%. China closed up 2.4%.  Hong Kong closed up 2.2%. India closed up 2.1%. Indonesia closed up 0.9%. Japan closed up 0.3%. Singapore closed up 1.6%. South Korea closed up 1.2%. Taiwan closed up 1.6%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: There will be a mid-week in-depth Markets Signals and Recommendations update on your website, covering the stock market, gold, bonds, and dollar, later today.

Markets this morning.

European markets were up earlier but have given up the gains, and are now down fractionally, on average of about 0.3%.

Oil is up $.08 a barrel at 77.31 at the moment.

Gold is down $4 an ounce at $1,112, but bouncing back a big $33 for the week so far after plunging two weeks in a row along with the stock market.

Markets in the U.S.

This week’s fairly heavy schedule of potential market-moving economic reports continues.

The schedule ends on Friday with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a one to three-day triple-digit move in one direction or the other.

To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Yesterday’s report, Pending Home Sales Index, was a positive, rising 1% in December, after plunging 16.4% in November. It does indicate the continuing importance of the bonus to home-buyers program, which was set to expire in November, and then extended to April 30 of this year.

The focus now shifts to jobs reports. As noted at the top of the post, the first of the reports, the ADP Jobs Report, released at 8:30 am, was an encouraging report.

But the pre-open indicators were not impressed, in fact weakened further.

Our pre-open indicators this morning are somewhat negative, pointing to the Dow being down 30 points or so in the early going, not meaningful in regard to direction at the close.

Stock Market Patterns.

The ‘monthly strength period’ was due to begin last Thursday, and to run through tomorrow, Feb. 4. The next weekly pattern is that next week is the week before this month’s options expirations week, and the week before tends to be negative.

Interesting Charts of the Morning.

Just an update of the renewed rally in relation to the potential short-term resistance at the 21-day m.a.

The Dow closed yesterday at 10,297. The 21-day m.a. on the Dow is at 10,449, 150 points higher.

Please scroll down to recent ‘Interesting Charts of the Morning’ and commentary.

SUBSCRIBERS: There will be a mid-week in-depth Markets Signals and Recommendations update on your website, covering the stock market, gold, bonds, the dollar, later today.

To read my weekend newspaper column ‘Is This as Good As It’s Going to Get?’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Tuesday, February 2, 2010. 9:15 am.

Japan’s Financial Services Minister, Shizuka Kamei, recommended yesterday that Japan Post Bank, the largest bank in the world, with more than $2.1 trillion in assets, diversify its holdings to include more U.S. Treasury bonds.

Kamei said that at the present time “nearly 80% of the bank’s assets are used to buy Japanese Government Bonds (JGB), but from now on any increase in assets could be used to diversify by buying corporate bonds and U.S Treasuries. . . . . . The U.S. is having difficulty due to lack of funds. It’s only natural that we should support the U.S. when it is weakened. So Japan Post Banks’ funds may go towards that.”

Tax plans may hit U.S. corporate earnings and capital gains.

Over the last nine years the federal budget surpluses of the late 1990s have turned into a record deficit that everyone agrees must be brought down. But it may be too early yet to try to do so without risking more problems for the economy and markets.

In the 1990s the previous record government deficit of the 1980’s and early 1990s was turned into a surplus by the lack of costly wars and other unusual government spending, coupled with record tax revenues the government took in from the rip-roaring economic boom, from corporate profits, income taxes from fully employed workers, and capital gains taxes on investors’ profits during the record 10-year bull market. Tax revenues were pouring into Washington from the 1990s boom times faster than it was being spent.

But trying to produce higher tax revenues to lower the deficit by raising taxes on those corporations that still have earnings, and on investors who are still making profits on their investments, rather than raising the earnings, jobs, and profits that produce taxes, is not the same thing, especially in an economy that is still teetering on the brink.

It’s also early to try to bring the current record budget deficit down, when the last of the string of problems that caused it, the massive stimulus efforts needed to rescue the economy from a potential depression, are still needed, while previous drags on the economy, two wars, also continue to require heavy government spending.

Among current proposals being considered:

Raising the tax on capital gains from 15% to 20%.

The potential problem is that entices investors to sell current holdings while they still only have to pay a 15% tax on the profits, at a time when more investment, not less, is needed to keep the economic recovery going. I haven’t taken the time to research it thoroughly, but do recall that at least once in the past raising the capital gains rate was later identified as one of the main catalysts for the selling that rolled the stock market over into a bear market.

A second proposal is to tax large U.S. based multi-national corporations, via taxes and surcharges on intercompany transactions they make with their foreign divisions to lower their tax bite, and to impose a waiting period before corporations who make loans to invest in their foreign operations can deduct the interest they pay on the loans.

Those may be good things to do later. But anything right now that cuts into corporate profits, whether from their U.S. or foreign operations, slows the ability of corporations to recover from the earnings slump of the last five quarters, and their ability to move on to investing in new products and hiring back workers, and thus may be counter-productive to the recovery.

It just might be better to let the deficit get worse for now, in an effort to get the economy more robustly recovered faster, to a point where tax revenues would be growing fast on their own, when bringing the deficit under control would then be faster and easier and would make up for the lost time. (As well as getting people back to work faster and getting corporate earnings more surely back on a growth track first).

Yesterday in the U.S. Market.

Finally a  positive day. The market was up from the open and closed on its high.

Yesterday’s intraday chart:

The Dow closed up 118 points, or 1.2%. The S&P 500 closed up 1.4%. The NYSE Composite closed up 1.8%. The Nasdaq closed up 1.1%. The Russell 2000 closed up 1.2%. The DJ Transportation Avg. closed up 1.7%.

However, it was on very low volume, only 1 billion shares traded on the NYSE, and was on the first day of the month when extra chunks of money flow automatically into the market, from monthly contributions from those who dollar-cost average into the market on a monthly basis, from employers’ monthly contributions to their employees’ 401K  and IRA plans, from automatic re-investment of monthly dividend payments, etc., thus the ‘monthly strength period’ each month.

And it took place with the market very oversold short-term to a degree that usually brings at least an oversold bounce (see interesting charts of the morning below).

In any event the low volume indicates that while the media was excited yesterday, investors were not.

With earnings coming in much better than forecasts, what more do investors want?

Asian markets closed mixed last night.

Among individual countries:

Australia closed up 1.8%. China closed down 0.3%.  Hong Kong closed up 0.1%. India closed down 1.2%. Indonesia closed down 0.3%. Japan closed up 1.6%. Singapore closed down 0.6%. South Korea closed down 0.7%. Taiwan closed down 1.3%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: There is a hotline message on your website from last evening.

Markets this morning.

European markets are off earlier highs but are up this morning, on average of less than 1/2%.

Oil is up $.75 a barrel at 75.18 at the moment.

Gold is up $7 an ounce at $1,112 at the moment, following its big rally of $26 yesterday.

Markets in the U.S.

This week’s fairly heavy schedule of potential market-moving economic reports continues.

The schedule ends on Friday with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a one to three-day triple-digit move in one direction or the other.

To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.

Today’s only scheduled report is the Pending Home Sales report, to be released at10 a.m.

In spite of better than expected earnings from a number of companies this morning, including UPS, Dow Chemical, ADP, Pepsi Bottling, and home-builder D.R. Horton, the pre-open indicators are off their earlier highs.

Our pre-open indicators this morning are fractionally positive, pointing to the Dow being up 15 points or so in the early going, meaningless as to direction by the close.

Stock Market Patterns.

The ‘monthly strength period’ was due to begin last Thursday, and to run through this Thursday, Feb. 4. The next weekly pattern is that next week is the week before this month’s options expirations week, and the week before tends to be negative.

Interesting Charts of the Morning.

As I’ve been pointing out, the two-week plunge has the major indexes, in the U.S. and global markets, short-term oversold beneath their 21-day moving averages, where a short-term bounce back up toward the m.a. is likely. 

Now that the previous short-term support at the 21-day m.a. has been broken there is the potential for the 21-day m.a. to be short-term overhead resistance, which might indicate a correction is underway rather than a minor ‘pullback’.

Please scroll down to recent ‘Interesting Charts of the Morning’ and commentary.

SUBSCRIBERS: There is a hotline message on your website from last evening.

To read my weekend newspaper column ‘Is This as Good As It’s Going to Get?’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Monday, February 1, 2010. 9:15 am.

As all countries do when they become larger and more dominant, China is increasingly flexing its economic muscles to convince others to follow its wishes. Smaller nations have been finding that out in recent years. Google has been finding that out in recent weeks.

Import/export sanctions, such as the U.S. has had against Cuba for decades, and as the U.S. and its allies have against Iran and others due to their nuclear ambitions, are a typical tactic.

And China apparently feels strong enough now to challenge the U.S. with economic sanctions.

China threatened yesterday to impose trade sanctions on U.S. weapons manufacturers if the U.S. goes forward with a $6.4 billion arms deal with Taiwan. Taiwan is just off the coast of China and has been in a decades long dispute with mainland China.

The deal includes 60 Blackhawk helicopters, 114 Patriot missiles, and weapons systems supplied by Boeing, United Technologies, Lockheed Martin, and Raytheon.

Sanctions could hurt the U.S. companies. Boeing sales to China have accounted for 4% of the company’s total revenue over the last three years, and the company estimates that China will need 3,700 new aircraft, worth $400 billion, over the next 18 years.

Global leaders are calling for talks between the U.S. and China to prevent a crisis over the issue.

Asian markets were mixed last night.

The DJ Asia-Pacific Index closed down 0.3%.

Among individual countries:

Australia closed down 1.1%. China closed down 1.6%.  Hong Kong closed up 0.6%. India closed unchanged. Indonesia closed down 0.9%. Japan closed up 0.1%. Singapore closed down 0.3%. South Korea closed up 0.3%. Taiwan closed down 1.5%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: There is a Special Report and hotline on your website from Saturday.

Markets this morning.

European markets are up some, on average of about 0.3%.

Oil is up $.71 a barrel at 73.60 at the moment.

Gold is up $4.30 a barrel at $1,088 at the moment.

Markets in the U.S.

This week brings another heavy schedule of potential market-moving economic reports, the ISM Mfg Index, Pending Home Sales, and the ADP Jobs Report among them.

And the schedule ends on Friday with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a one to three-day triple-digit move in one direction or the other.

To see the full schedule of next week’s reports click here, and look at the left side of the page it takes you to.

The report on Consumer Income and Spending was released at 8:30 a.m.

It showed that incomes rose a seasonally adjusted 0.3% in December, while spending rose only 0.1% after a 0.4% gain in November. The result was that the savings rate rose 4.6%, its highest level since 1998, as consumers apparently remain nervous and reluctant to spend.

There are two more reports due out today, the ISM Mfg Index, and Construction Spending, both at 10 a.m.

Our pre-open indicators this morning are positive, pointing to the Dow being up 60 points or so in the early going.

Unfortunately, positive futures prior to the open have not meant much recently. They also had futures pointing to the Dow being up 60 points on Friday, but it couldn’t hold the early gains past 11 o’clock, and closed down for the day again.

Stock Market Patterns.

The next ‘monthly strength period’ was due to begin last Thursday, and to run through this Thursday, Feb. 4. It sure has not shown up this time so far.

Interesting Charts of the Morning.

I’m sorry but I don’t have time to provide interesting charts of the morning this morning. 

Please scroll down to see Saturday’s ‘Interesting Charts of the Morning’ and commentary.

SUBSCRIBERS: There is a Special Report with short-term, and more importantly, our intermediate-term charts, signals and recommendations (and a hotline message) on your website from Saturday.

To read my weekend newspaper column ‘Is This as Good As It’s Going to Get?’ click here!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Saturday, January 30th, 2010. 9:45 am.

Global government representatives went to the annual meeting of the World Economic Forum in Davos this week with one of their goals being to get started on a global effort to impose tough regulations on major banks.

Executives of major banks went to the meeting determined to lobby against new regulations on their industry.

The win seemed to go to the government side.

U.S. Congressman Barney Frank said after yesterday’s meeting that global governments are in control, not the banks, “No one got up and said “Don’t regulate us. It would have been a waste of their time if they did.” Asked later if he thought the bankers had gotten the message, he replied, “Frankly it doesn’t matter if they did or didn’t. They aren’t in charge of this.” The chief of Britain’s Financial Services Authority said, “It was not a negotiation or a debate.”

Don’t be too sure of whose in control, Mr. Frank.

Bankers left the meeting basically making no comment except along the lines that “It was a useful meeting”.

The bankers had already made their comments, having warned weeks prior to the meeting that the U.S. and other countries risk choking off the gradual global recovery if they impose tough regulations on the banking industry.

What better way to emphasize that warning than to create a plunge in global stock markets?

You think they couldn’t do that?

Long-time readers are aware of how I have ranted for years about the influence the large program-trading firms have over the daily trading on the stock market with their massive buy and sell programs. The control, when they want it, is most obvious when big waves of buy programs often come in during the final hour or minutes of a declining market and drive the market up to a positive close for the day.

Last week program-trading accounted for 25.1% of all the trading on the NYSE. Do you think that if you controlled 25% of all trading you could move the market in whichever direction you wanted? Not much doubt about it. Not that they would or did, but that they could.

And who are the major program-trading firms? They are the major banks and brokerage firms trading for their own accounts and those of their largest customers, the very firms that dark clouds of potential profit-restricting regulations hover over.

The top ten most active program-trading firms last week were Goldman Sachs, Morgan Stanley, Barclay’s Capital, Deutsche Bank, Wedbush Morgan Securities, Credit Suisse, JP Morgan, Penson Capital (global broker-dealer), RBC Capital (Royal Bank of Canada), and Merrill Lynch (now a division of Bank of America).

A serious market decline would probably have more effect on government determination to hit the banks with tough regulations right now than any amount of lobbying the banks might do.

Just a thought.

Not that market manipulation is possible in the modern market.

After all, the Glass-Steagal Act, the Up-Tick Rule on short-selling, the Curbs on Program Trading, etc., were regulations passed after the 1929 and 1987 crashes to prevent a repeat of market manipulation by banks and brokerage firms.

So we can relax on that score. . . .  Oh, that’s right. Those regulations were all repealed in the 1990’s under pressure from the financial industry, weren’t they. . . . Oh well.

Interesting Charts of the Morning.

Isn’t it interesting that the selling that has plunged the overall market for two weeks hasn’t affected the banking sector, which remains above its 21-day m.a., and within a fraction of its highs.

Yes, the selling has been in the rest of the market, leaving the banking sector untouched. Is that odd under the circumstances?

(You might want to send this blog post to Barney Frank, or to the media, where it would get more coverage than from my obscure voice).

,

Yesterday in the U.S. stock market.

The market got off to a healthy start yesterday in response to the strong 4th quarter GDP report, with the Dow up 120 points in the first hour. But it couldn’t hold the gains. Heavy selling took over that had the market at unchanged by 12 o’clock. Another partial rally into positive territory in the afternoon was squashed in the final 90 minutes, to close the market down for the day, closing it at its low for the day and the week.

And as happened in the previous week’s plunge, volume picked up to almost 1.6 billion shares traded on the NYSE on the down day.

Yesterday’s intraday chart:

The Dow closed down only 53 points, or 0.5%. But the S&P 500 closed down 1.0%. The NYSE Composite closed down 1.1%. The Nasdaq closed down 1.5%. The Russell 2000 closed down 1.0%. The DJ Transportation Avg. closed down 1.1%.

Global markets for the week.

Again this week, no green anywhere. And once again global markets were already down as much as the U.S. before the negative day in the U.S. yesterday, including the highly touted  ‘BRIC’ countries (Brazil, Russia, India, China), and emerging markets. EFT’s on the U.S. dollar, and Treasury Bonds, were about the only safe havens, except short-sales and downside positions of course.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

SUBSCRIBERS: There will be another important Special Report on your website later today, probably around 5 o’clock. That will be the 3rd special weekend report in 3 weeks.

What’s next for stock markets?

As if the market didn’t already have enough to worry about, next week brings another heavy schedule of potential market-moving economic reports, the ISM Mfg Index, Pending Home Sales, and the ADP Jobs Report among them.

And ending with what we always refer to as The Big One!, the Labor Department’s monthly Employment Report, this one for January. We call it the big one because it has the record for most often coming in with a surprise in one direction or the other that sends the Dow in a triple-digit move in one direction or the other.

To see the full schedule of next week’s reports click here, and look at the left side of the page it takes you to.

Stock Market Patterns.

The ‘monthly strength period’ was due to begin on Thursday, and to run through next Thursday, Feb. 4. It certainly did not happen so far. (That could be a bad sign, as it isn’t as consistent in bear markets as in bull markets).

Please scroll down to see other recent ‘Interesting Charts of the Morning’ and commentary.

To read my new weekend newspaper column ‘Is This as Good As It’s Going to Get?’ click here!

I’ll be back Monday a.m. after a look at events over the weekend, Asian markets Sunday night, and early morning indicators for Monday.

SUBSCRIBERS: There will be another important Special Report on your website later today, probably around 5 o’clock.

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Friday, January 29, 2010. 9:15 am.

Last week Warren Buffett’s holding company Berkshire Hathaway split its ‘B’ shares 50 to 1. The move was an abrupt turnaround from Buffett’s long-time aversion to stock splits.

Through the decades, as the economy and markets and his investments grew, the ‘A’ shares have sold as high as $148,000 a share, and the ‘B’ shares as high as $4,700 a share.

It’s always been assumed that Buffett’s reason for never splitting the shares was that he wanted the stock in the strong hands of the wealthy, who would not need to be periodically selling shares to raise money for other purposes, and who could handle the markets ups and downs without bailing out.

However, in November Buffett decided to acquire the 78% of railroad Burlington Northern that he didn’t already own, offering Burlington’s shareholders $100 a share, to be paid in either Berkshire stock, or cash. In order to allow more of Burlington Northern’s smaller shareholders to opt for the Berkshire shares rather then cash, he announced he would split Berkshire’s ‘B’ shares 50 to 1. The split took place last Thursday. The stock was trading around $3,440 a share on Wednesday and just under $70 after the split.

The move also allowed Standard & Poor’s to more easily put Berkshire Hathaway stock in the S&P 500 index, and the S&P 100 index, which it subsequently announced will happen in February (when the acquisition of Burlington Northern takes place and Burlington is removed from the S&P 500).

First the stock split, making Berkshire shares infinitely more affordable for small investors who would love to finally be able to invest with the “best investor in the world”, and then Berkshire’s coming move into the S&P 500 index, brought significant buying volume and a nice pop-up in the stock.

I wonder if new investors to the stock will expect that investing with Buffett now that they can, will be a calming experience devoid of stress. After all, books about Buffett’s ‘way’ rarely talk about anything but his wisdom, wealth, and profits. Those who interview him treat him with awe, and would never dream of bringing up anything negative as he talks of his holdings and the sectors and markets he likes.

However,  he does speak often of having a five or ten-year time horizon when he makes an investment.

I wonder if new investors will bother to look at a long-tern chart to see what that might mean in the way of significant up and down volatility and stress, of the type that has them “swear off the damned market for good”, or jump from manager to manager hoping to find the impossible, someone who never has a problem period.

Because within his super long-term performance, Buffett seems to run into as much, if not more, volatility than most money managers. For example a 49.3% plunge in 1998 and 1999, before the 2000-2002 bear market began that took more than five years to get back to even, a 53% plunge in 2008-2009 from which he’s only recovered halfway so far. And a few other double-digit declines of 12 to 18 months duration.

If small investors follow their usual pattern of chasing performance (switching to whatever fund or sector or manager that was up over the most recent 12 months),  Buffett is liable to experience what he previously strived to avoid by not splitting his stock to bring it down within everyone’s reach.

Fourth quarter GDP grew 5.7%, better than forecasts of 5.4%!

The Commerce Department reported this morning that the economy grew at an annualized rate of 5.7% in the December quarter. It was the fastest quarterly pace since the third quarter of 2003 when the 2002-2007 bull market was in its early stages.

It was an increase over the 2.2% growth in the 3rd quarter of last year, which ended the severe recession. But overall the economy contracted by 2.4% for the full year of 2009, the worst year since 1946.

There were some problems within the report. Most of the 4th quarter growth came from a build-up of business inventories. Consumer spending rose 2.2%, less than the 2.9% rise in the 3rd quarter.

But business investment grew at a 2.9% annual rate, investment in housing at a 5.7% rate.

Overall, economists give the report high marks, but still expect economic growth will slow to 2.5% in coming quarters as the boost from inventory building fades.

Yesterday in the U.S. Market.

An ugly day after three days of trying to recover from last week’s big loss.

The market was down almost from the open, with the Dow down 180 points at its low at 11:30 am when it tried to claw its way back only to run into sell programs in the final half hour, to close down 115 points, or 1.1%.

Yesterday’s intraday chart:

The Dow closed down 115 point, or 1.1%. The S&P 500 closed down 1.2%. The NYSE Composite closed down 1.1%. The Nasdaq closed down 1.9%. The Russell 2000 closed down 1.7%. The DJ Transportation Avg. closed down 2.3%.

SUBSCRIBERS: The new issue of the newsletter is available on your website from Wednesday!

Asian Markets negative yet again last night, closing 2nd ugly week in a row.

While the U.S. market has been trying to recover this week from last week’s plunge, Asian markets continued with more sharp declines, only one positive session.

And it was another down session last night to end the week.

The DJ Asia-Pacific Index closed down 1.7%.

Among individual countries:

Australia closed down 2.1%. China closed down 0.2%.  Hong Kong closed down 1.2%. India closed up 0.3%. Indonesia closed down 0.3%. Japan closed down 2.1%. Singapore closed down 0.4%. South Korea closed down 2.4%. Taiwan closed down 0.7%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

Markets this morning.

European markets are up quite strongly, adding to gains after 4th quarter GDP numbers were released at 8:30 in the U.S, now up more than 1% on average.

Oil is up $1.09 a barrel at 74.73 at the moment.

Gold is unchanged at $1,084 at the moment.

Markets in the U.S.

This week’s heavy schedule of potential market-moving economic reports continues. To see the full schedule of the reports click here, and look at the left side of the page it takes you to.

Monday it was a shocker, that Existing Home Sales plunged 16.7% in December, the biggest monthly drop in 40 years. Tuesday it was that Consumer Confidence rose to 55.9 in January from 52.9 in December. Wednesday it was that New Home Sales unexpectedly fell 7.6% in December, and the Fed’s FOMC announcement which was taken as a positive regarding the economic recovery. Yesterday it was that Durable Goods Orders rose 0.3% in December, less than forecasts of a 1.7% gain, and new claims for unemployment fell by 8,000 last week, not as positive as the consensus forecast for a decline of 28,000 claims.

This morning it was the first estimate of 4th quarter GDP, and it was a positive surprise, showing the economy grew 5.7% in the December quarter, compared to the consensus estimate of 5.4%, It was the largest gain since the 3rd quarter of 2003 as the last bull market was underway.

The report improved our pre-open indicators, which were already somewhat positive, but not as much as might have been expected on the GDP number.

Our pre-open indicators this morning are positive, pointing to the Dow being up 60 points or so in the early going.

Stock Market Patterns.

The next ‘monthly strength period’ was due to begin yesterday, and to run through next Thursday, Feb. 4. It sure got off to a bad start yesterday.

Interesting Chart of the Morning.

I noted above how Asian markets have been down sharply for a second week in a row, not attempting to recover from last week’s ugly week, while the U.S. market has at least been trying to recover.

It’s been a similar situation with emerging markets, which Wall Street has been assuring investors would be the place to be.

Emerging markets closed down sharply again this week, and are now down 14.5% from their high. That’s more than double the pullback in the S&P 500 of 5.7%.

Please scroll down to see other recent ‘Interesting Charts of the Morning’.

To read my weekend newspaper column from last weekend ‘Ganging Up On the Market’’ click here! It will be replaced with this week’s column later today.

NOTE: Although tomorrow is Saturday and markets will be closed I will be back in the morning, usually around 10 a.m., a little later than the normal 9:15 a.m., with a wrap-up commentary on whatever today’s market action turns out to be, and on the week, and an outlook for Monday and next week.

SUBSCRIBERS: The new issue of the newsletter is available on your website from Wednesday!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.

Thursday, January 28, 2010. 9:15 am.

In its first major debate yesterday, economists, large investors and money managers attending the WEC annual meeting in Davos, Switzerland mostly predicted that economies in the U.S. and Europe will see their economic recoveries stall later this year, and global recovery elsewhere will depend on fast developing countries like China and India.

George Soros said he backs President Obama’s plan to limit trading and risk activities of major banks, an idea that is spreading through Europe as an approach to prevent future problems, but criticized the timing as premature coming before the banking industry has fully earned its way out of loan losses and other problems.

Why did the Fed ignore the housing industry in its statement?

The Fed’s announcement after its FOMC meeting yesterday was interpreted as positive since the phrasing in the closely watched announcement was changed from saying the economic recovery would be “weak for a time” to saying it will be “moderate for a time”.

But did anyone else notice that it completely dropped its remarks made in previous FOMC announcements about an improving housing sector?

Could that have been a last minute decision, as in if you can’t say something good about it don’t say anything at all?

Could be, given this week’s reports that new housing ‘starts’ unexpectedly fell 4% in December, that after several months of increases existing home sales fell a huge 16.7% in December, the largest monthly decline in 40 years, and yesterday’s report that new home sales unexpectedly fell 7.6% in December, following a plunge of 9.3% in November.

It was a strange omission given the importance of the housing industry to the the economy, and the government’s focus on its recovery now that the banks have been saved.

The announcement did confirm that the Fed still intends to end its purchases of up to $1.25 trillion of agency mortgage-backed securities by March 31, a program that has been an important source of mortgage credit over the last year. So at least that is an indication they don’t see the housing industry as likely to head south again

Did last week’s market plunge find downside support?

Last week’s 5.2% three-day plunge halted with the major indexes just about on their 20-week moving averages. That is the support level that has ended all the ‘pullbacks’ so far in this bull market. And so far this week the major indexes have rallied fractionally off that potential support.

Yesterday in the U.S. Market.

Finally a day when market weakness in the early going was followed by strength in the afternoon. And volume picked up some on the up-day, with 1.3 billion shares traded on the NYSE.

Note the volatility after the Fed’s FOMC meeting announcement was released at 2:15 p.m., first a spike down, then a spike-up and then a continuation of the upside to a positive close.

Yesterday’s intraday chart:

The Dow closed up 41 points, or 0.4%. The S&P 500 closed up 0.5%. The NYSE Composite closed up 0.1%. The Nasdaq closed up 0.8%. The Russell 2000 closed up 1.0%. The DJ Transportation Avg. closed up 0.5%.

SUBSCRIBERS: The new issue of the newsletter is available on your website from yesterday!

Asian Markets finally put in a positive session.

While the U.S. market has been trying to recover this week from last week’s plunge, Asian markets continued with more sharp declines. But last night it had a positive session.

The DJ Asia-Pacific Index closed up 0.9%.

Among individual countries:

Australia closed up 0.6%. China closed up 0.3%.  Hong Kong closed up 1.6%. India closed up 0.1%. Indonesia closed up 2.1%. Japan closed up 1.6%. Singapore closed up 1.9%. South Korea closed up 1.0%. Taiwan closed up 1.8%.

If you’d like to see a three-month chart of any or all of the above indexes click here, and then click on any of the markets in the similar list at the left side of the page it takes you to.

Markets this morning.

European markets are up some, on average of about 1/2%.

Oil is up fractionally, up $.33 a barrel at 74.00 at the moment.

Gold is up $3 an ounce at $1,090.

Markets in the U.S.

This week’s heavy schedule of potential market-moving economic reports continues. To see the full schedule of the reports click here, and look at the left side of the page it takes you to.

Monday it was a shocker, that Existing Home Sales plunged 16.7% in December, the biggest monthly drop in 40 years. Tuesday it was that Consumer Confidence rose to 55.9 in January from 52.9 in December. Yesterday it was that New Home Sales unexpectedly fell 7.6% in December, and the Fed’s FOMC announcement which was taken as a positive regarding the economic recovery.

Today’s reports were released at 8:30 a.am. The Commerce Department reported that Durable Goods Orders rose 0.3% in December after a 0.4% decline in November. It was less than forecasts of a 1.7% gain.

And the Labor Department reported that the number of new claims for unemployment fell by 8,000 last week to 470,000, not as positive as the consensus forecast for a decline of 28,000 claims to 450,000.

Earnings reports this morning are mostly better than estimates; Motorola, 3M, Textron, Raytheon, Colgate Palmolive, Eli Lilly, Ford.

(Two of our previous “Stock of the Month” selections (see top of column at right) McCormick & Co (MKC), and Celgene (CELG) reported sharply higher 4th quarter earnings.).

Our pre-open indicators this morning are positive, pointing to the Dow being up 50 points or so in the early going.

Stock Market Patterns.

The next ‘monthly strength period’ is due to begin today, and to run through next Thursday, Feb. 4.

Interesting Chart of the Morning.

I noted above how the big declines last week by the major market indexes (Dow, S&P 500, Nasdaq, Transportation Avg, etc.) stopped last week at the potential support at their 20-week moving averages.

On Monday I showed you how last week’s big decline also had the major indexes short-term oversold beneath their short-term 21-day moving averages to a degree likely to bring at least a short-term bounce back up to the m.a., but that the key will be what happens as it approaches the potential short-term resistance at the m.a.

So far this week the market has been making an attempt to rally.

Please scroll down to see other recent ‘Interesting Charts of the Morning’.

To read my new weekend newspaper column ‘Ganging Up On the Market’’ click here!

SUBSCRIBERS: The new issue of the newsletter is available on your website from yesterday!

Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?

Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! 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.