The big worry among market technicians has been whether the U.S. market would find the 200-day m.a. to be overhead resistance that would end the rally. Failure at the 200-day might mean the summer correction was the first leg down in a new bear market, and the rally off the October low was just a bear market rally, doomed to fail and bring on the next leg down.

But so far anyway the major indexes have broken out above their 200-day m.a.’s and while it isn’t a clear break out, it seems to be increasingly confirmed.

But just as investors begin to gain confidence in the rally, the market has again become short-term overbought above short-term moving averages to a degree that could soon bring a pullback that will bring back the worries.

We’ll be watching our technical indicators for that possibility, and to determine whether we should take some of our profits from the rally.

My apologies but I’m travelling this morning and that’s all I have time for.

To read my weekend newspaper column ‘Brazil Looks Like A Buying Opportunity Again’ Click here.

Subscribers to Street Smart Report: The Mid-Week in-depth ‘Signals and Recommendations’ report on the U.S. market is in the subscribers’ area of the Street Smart Report website from yesterday, and a hotline from last evening.  There is also an in-depth ‘Global Markets’ report from Tuesday. 

Yesterday in the U.S. Market.

The market closed up again.

The Dow closed up 96 points, or 0.8%. The S&P 500 closed up 1.1%. The NYSE Composite closed up 1.3%. The Nasdaq closed up 1.5%. The Nasdaq 100 closed up 1.4%. The Russell 2000 closed up 1.8%. The DJ Transportation Avg. closed up 1.0%. The DJ Utilities Avg closed up 0.1%.

Gold closed up $10 an ounce at $1,659 an ounce.

Oil closed up $0.93 a barrel at $101.52 a barrel.

The U.S. Treasury bond etf TLT closed down 1.2%.

Yesterday in European Markets.

Markets in Europe closed up fractionally mixed yesterday. The London FTSE closed up 0.2%. The German DAX closed up 0.3%. France closed down 0.2%.

Asian Markets Closed up Last Night.

The DJ Asia-Pacific Index closed up 0.9%.

Among individual markets:

Australia closed down 0.1%. China closed up 1.7%. Hong Kong closed up 1.3%. India closed up 1.2%. Indonesia closed up 0.6%. Japan closed up 1.0%. Malaysia closed up 0.1%. New Zealand closed up 0.5%. South Korea closed up 1.2%. Singapore closed up 0.6%. Taiwan closed up 0.2%. Thailand closed up 0.7%.

Premium Content Area. For Street Smart Report subscribers only, used to provide additional info to that provided in newsletter, mid-week reports, and hotlines.

To obtain access click on the ‘Subscribe’ link below which will take you to an information page on subscribing to Street Smart Report.

Markets This Morning.

European markets are up this morning. The London FTSE is up 0.5%. Germany’s DAX is up 0.8%. France’s CAC is up 1.8%

Oil is up $1.00 a barrel at $101.63.

Gold is up $1 an ounce at $1,660 an ounce.

This morning in the U.S. Market:

This is a quite heavy week for potential market-moving economic reports including the Producer Price Index, Consumer Price Index, New Housing Starts, and Existing Home Sales. To see the full list click here, and look at the left side of the page it takes you to.

Tuesday’s report was that the Empire State (NY) Mfg Index jumped to 13.5 in January, better than forecasts of a rise to 11.3, and its highest level in 9 months.

Yesterday it was that inflation remains tame in the U.S., with the Producer Price Index declining 0.1% in December versus the consensus forecast of an increase of 0.1%. And Industrial Output was up 0.4% in December in line with the consensus forecast. And the NAHB Housing Market Index measuring home-builder optimism rose 4 points to 25, much better than forecasts, the 4th monthly increase in a row.

This morning’s reports are that weekly unemployment claims plunged by 50,000 last week to 352,000, the lowest level since April, 2008. The four-week moving average declined to 379,000. And inflation at the consumer level also remains tame, with the Consumer Price Index coming in unchanged in December.

The disappointing report was that new housing starts declined by 4.1% in December, but that comes after an unusual surge of 9.1% in November.

Our Pre-Open Indicators:

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

To read my weekend newspaper column ‘Brazil Looks Like A Buying Opportunity Again’ Click here.

Subscribers to Street Smart Report: The Mid-Week in-depth ‘Signals and Recommendations’ report on the U.S. market is in the subscribers’ area of the Street Smart Report website from yesterday, and a hotline from last evening. There is also an in-depth ‘Global Markets’ report from Tuesday.

Non-subscribers: Time for a New Year’s resolution to improve on your investment returns in 2012? We believe we can help, and at very reasonable cost!

Our portfolios were up an average of 9.4% last year, our Seasonal Timing Strategy up 15.8%, in a flat year (S&P 500 unchanged for year) when many, if not most, managers and funds were down for the year. We were on Hulbert’s Ten Best Newsletters of the Year list for the 2nd time in 4 years, and #4 Long-Term Market-Timer in Timer Digest’s rankings.

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, an in-depth 6-page ‘Global Markets’ update every three 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 25th 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 Saturday morning with the regular Saturday morning post, as usual later than the weekday posts, probably around 11 a.m. eastern time. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

Most professional money managers will tell you it pays to set what will be your exit strategy when you take a position. Not having a pre-set exit strategy when things don’t go as expected right away (which is not all that unusual) leaves you subject to potentially reacting to emotions if the situation deteriorates to a high level of concern, or even fear.

The month of November was a classic example.

The exit strategy for our Seasonal Timing Strategy is mechanical. Once in for its favorable season it remains fully invested until the following spring. In the spring it has an earliest acceptable exit date, with the exit thereafter determined by the short-term MACD momentum reversal indicator. If MACD is on a sell signal when the earliest date arrives, STS exits immediately on that date. But if MACD is on a buy signal when the earliest exit date arrives, STS remains fully invested until short-term MACD rolls over into its next sell signal. It sometimes adds several months to the favorable season. Non-emotional, fixed entry and exit strategies.

But this year, due to our concerns about the eurozone debt crisis, we took the unusual step of adding a second temporary exit strategy just in case.

We recommended a protective stop be placed 8.5% beneath the entry price of our holding at the entry, to be raised as the price rose to keep it always 8.5% beneath the highest price reached (on a daily closing basis).

As it turned out the highest price reached on the holding was $122.04, so the stop was at $111.67 when the carnage in November began.

At last Friday’s market low, and in the midst of all the fear-filled headlines, the holding closed at $112.14, less than 1/2% from the stop. Some subscribers bailed out, convinced it could not hold, even though in the premium content of the blog and other communications we showed how the market was very oversold short-term and at a potential trendline of support where at least an oversold rally was highly likely.

And in three days this week the holding has gained back 7.2% and is well above the stop again.

By the way as of yesterday’s close our Seasonal Timing Strategy is up 13.8% for the year so far, compared to the benchmark S&P 500 being down 0.4% year-to-date.

Our exit strategy in our Market-Timing Strategy is based on technical analysis and technical indicators and their intermediate-term buy and sell signals on the market.

It triggered a sell signal May 8, and a buy signal October 27. The carnage in November was doing a job on it. We cut back exposure in November when our intermediate-term indicators weakened, but they remained on the buy signal.

So at the end of last week, we told subscribers “The additional spike-down of the last week or so has many markets, including the U.S., very oversold short-term, to a degree where at least an oversold rally similar to those that repeatedly took place off oversold conditions during the summer, would be normal even in a troubled market. And our intermediate-term technical indicators remain on the October buy signal. But next week will be important.”

And so it was. As was the discipline of sticking with the previously established exit strategy. Last week the market may have been headed for the worst November in years, after experiencing the best October in years.

But with the rally of the last three days of the month, November didn’t turn out so bad after all.

The S&P 500 closed at 1,249 on October 31, and just 3 points lower yesterday, November 30, down just 0.2% for the month.

Update on Our Forecast for the Year.

Last December our forecast for this year was for a minor correction in February/March, followed by a resumption of favorable season strength to a new high, and then a serious correction of 18% or so for the S&P 500 in the market’s unfavorable season, to a low in the October/November time-frame. And then a big rally to put the market in positive territory for the year.

That all seemed to be working out as expected, with the low coming on October 3. But the sudden reversal to the downside in November did unnerve us regarding the final stage of the forecast.

We’ll be making our forecast for next year in the next few weeks, probably in the next issue of our newsletter.

And we will be providing a study of markets in election years.

To read my weekend newspaper column ‘Here’s Something Investors Can Be Thankful For!’ click here!

Subscribers to Street Smart Report: The new issue of the newsletter and the regular Wednesday evening hotline are in the subscriber area of the Street Smart Report website for you from last evening.

Yesterday in the U.S. Market.

The biggest one-day gain since March, 2009 when the beginning of the new bull market began so explosively. And it was on big volume of 1.7 billion shares traded on the NYSE, almost double recent volume levels.

The Dow closed up 490 points, or 4.2%. The S&P 500 closed up 4.1%. The NYSE Composite closed up 4.7%. The Nasdaq closed up 4.2%. The Nasdaq 100 closed up 3.8%. The Russell 2000 closed up 5.9%. The DJ Transportation Avg. closed up 4.8%. The DJ Utilities Avg closed up 2.7%.

Gold closed up $25 an ounce at $1,750.

Oil closed up $1.14 a barrel at $100.38.

The U.S. dollar etf UUP closed down 0.9%.

The U.S. Treasury bond etf TLT closed down 1.5%.

Yesterday in European Markets.

Markets in Europe also closed sharply higher yesterday. London closed up 3.2%. The German DAX closed up a huge 5.0%. France closed up 4.2%.

Asian Markets Closed Up Sharply Last Night.

The Asia Dow closed up 3.9% last night.

Among individual markets last night:

Australia closed up 2.5%. China closed up 2.3%. Hong Kong closed up 5.6%. India closed up 2.2%. Indonesia closed up 1.8%. Japan closed up 1.9%. Malaysia closed up 0.7%. New Zealand closed up 0.2%. South Korea closed up 3.7%. Singapore closed up 2.2%. Taiwan closed up 4.0%. Thailand closed up 2.4%.

Premium Content Area. For Street Smart Report subscribers only, used to provide additional info to that provided in newsletter, mid-week reports, and hotlines.

To obtain access click on the ‘Subscribe’ link below which will take you to an information page on subscribing to Street Smart Report.

Markets This Morning.

European markets are mixed and flat, digesting their big gains of the last three days. The London FTSE is up 0.53%. Germany’s DAX is down 0.2%. France’s CAC is up 0.1%.

Oil is up $0.08 a barrel at $100.44.

Gold is up $2 an ounce at $1,752 an ounce, and up a big $72 an ounce for the week.

This morning in the U.S. Market:

This is a very big week for potential market-moving economic reports, including New Home Sales, the Home Prices Index, the ISM Mfg Index, ADP Jobs Report, and on Friday The Big One!, the Labor Department’s employment report for November. 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.

Monday’s report was that New Home Sales rose 1.3% in October over September, but only because September sales were revised down. However, year over year new-home sales in October were 8.9% above their October, 2010 level.

Tuesday’s reports were that the Case-Shiller Home Price Index showed U.S. home prices declined 0.6% in September.

Yesterday’s reports were the ADP jobs report, which showed a surprising 206,000 new jobs were created in November, and the October number was revised up from 110,000 to 130,000. The Chicago PMI Index rose to 62.6 in November from 58.4 in October, and is at its highest kevel in 7 months. Third quarter Productivity was revised down to 2.3% from the initial reading of 3.1%. Pending Home Sales surged up 10.4% in October. And the Fed’s Beige Book assessment of the economy improved some, saying the economy expanded at a moderate pace in 11 of the 12 Fed districts since the previous report. .

This morning’s report so far was that new weekly unemployment claims rose by 6,000 last week to 402,000. Still to come are the national ISM Mfg Index. and Construction Spending, both of which will be released at 10 a.m. And Auto Sales, which will be released through the day.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being down 25 points or so in the early going.

To read my weekend newspaper column ‘Here’s Something Investors Can Be Thankful For!’ click here!

Subscribers to Street Smart Report: The new issue of the newsletter and the regular Wednesday evening hotline are in the subscriber area of the Street Smart Report website for you from last evening.

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*****

Markets were shocked by the news yesterday that MF Global, a giant in commodities brokerage and trading, was filing for bankruptcy.

The estimated $41 billion bankruptcy puts it at #7 on the list of the largest bankruptcies ever. That the losses that led to the sudden bankruptcy were reportedly related to bets on the European debt crisis, the use of high leverage on holdings, and the use of derivatives, raises alarm flags all over the place.

And now overnight, markets were absolutely stunned by the news that Greece is going to hold a public referendum on whether the government should accept the rescue plan its government officials supposedly agreed to last week.

With the unpopularity of the austerity measures that will be required of the Greek population, a referendum raises serious uncertainties over whether the rescue plan will survive. 

In my Saturday blog I noted that global markets were made significantly overbought short-term above their 50-day moving averages by last week’s spike-up relief rally, making a short-term pullback likely.

But I, nor no one else could have expected these two back-to-back shocks would be the catalyst for the pullback.

Yesterday’s plunge, as sharp as it was , is hardly a blip on the chart. But the shocking news from Greece will likely make for a even uglier day today.

It keeps my questions of Saturday in the forefront.

“Will a pullback from that overbought condition be the beginning of another leg down in a resumption of the summer correction? Or will favorable seasonality, improvements in the U.S. economy, and the turn up by the 50-day m.a., result in the spike-up being the beginning of another typical winter months rally, with any pullbacks from overbought conditions only temporary blips on the charts?”

To read my weekend newspaper column ‘The Wall of Worry Is Still There But Not As Foreboding!’ click here!

Subscribers to Street Smart Report: In addition to the charts and signals in the ‘premium content’ area of the blog this morning, the regular ‘Mid-Week U.S. Market Signals and Recommendations’ update will be in the subscribers’ area of the Street Smart Report website sometime tomorrow.

Yesterday in the U.S. Market.

An ugly day to end the best month in several years.

The Dow closed down 276 points, or 2.3%. The S&P 500 closed down 2.5%. The NYSE Composite closed down 3.1%. The Nasdaq closed down 1.9%. The Nasdaq 100 closed down 1.7%. The Russell 2000 closed down 2.6%. The DJ Transportation Avg. closed down 2.4%. The DJ Utilities Avg closed down 0.8%.

Gold closed down $22 an ounce at $1,724.

Oil closed down $0.78 a barrel at $92.54.

The U.S. dollar etf UUP closed up 1.9%.

The U.S. Treasury bond etf TLT surged up 4.0%.

Yesterday in European Markets.

Markets in Europe also closed down sharply yesterday. London closed down 2.8%. The German DAX closed down 3.2%. France closed down 3.2%.

Asian Markets Were Down Sharply Sunday Night  and Again Last Night.

The DJ Asia-Pacific Index closed down 2.3% Sunday night, and down 2.1% last night.

The only winners last night were China, New Zealand, South Korea, and Taiwan, and they were up only very fractionally.

Among individual markets last night:

Australia closed down 1.5%. China closed up 0.7%. Hong Kong closed down 2.5%. India closed down 1.3%. Indonesia closed down 2.8%. Japan closed down 1.7%. Malaysia closed down 1.2%. New Zealand closed up 0.1%. South Korea closed up 0.1%. Singapore closed down 2.3%. Taiwan closed up 0.5%. Thailand closed down 1.9%.

Premium Content Area. For Street Smart Report subscribers only, used to provide additional info to that provided in newsletter, mid-week reports, and hotlines.

To obtain access click on the ‘Subscribe’ link below which will take you to an information page on subscribing to Street Smart Report.

In the premium content area today: U.S. Market. Gold. Bonds.

Markets This Morning.

European markets are plunging this morning on the totally unexpected news that Greece may reject the bailout plan it agreed to last week. The London FTSE is down 3.5%. Germany’s DAX is down 6.0%. France’s CAC is down 5.7%.

Oil is down $3.40 a barrel at $88.79.

Gold is down $36 an ounce at $1,688 an ounce.

This morning in the U.S. Market:

This week is another important week for potential market-moving economic reports, including the ISM Mfg Index, the FOMC meeting announcement, Bernanke’s Press Conference after the FOMC meeting, and the Big One!, the Labor Department’s Employment Report for October. 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 was that the Fed’s Chicago area business barometer, the Chicago PMI, ticked down to 58.4 in October from 60.4 in September, but remained well above 50, the level that separates growth from contraction by its measurements. And the Fed’s Dallas area business-activity index posted its first positive reading in six months, jumping from –14.4 in September to +2.3 in October, back above its 0 level that separates growth from contraction by its measurements.

This morning’s reports will be out later, the national ISM Mfg Index, and Construction Spending, at 10 a.m. Automakers will be reporting their October sales throughout the morning.

But markets have already turned their focus away from signs of the economy improving and 3rd quarter earnings, back to the European debt crisis after the shocking news from Greece.

Our Pre-Open Indicators:

Our pre-open indicators are now pointing to the Dow being down 250 points or so in the early going.

To read my weekend newspaper column ‘The Wall of Worry Is Still There But Not As Foreboding!’ click here!

Subscribers to Street Smart Report: In addition to the charts and signals in the ‘premium content’ area of the blog this morning, the regular ‘Mid-Week U.S. Market Signals and Recommendations’ update will be in the subscribers’ area of the Street Smart Report website sometime tomorrow.

Non-subscribers: How are you doing so far in 2011? 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*****

There’s something different about this rescue plan for the European debt crisis, and I’m not talking about its more massive size and ambition.

With the previous plans of the last two years there was a fifty-fifty mix in the debates and analysis, some willingness to give them a chance.

But markets only rallied for a few months each time before the plans unraveled and the crisis popped up again in Greece and elsewhere.

Are pundits and talking heads tired of being fooled?

This time, in spite of much more aggressive rescue measures, a 50% haircut by bond-holders, the promise of increasing the bailout fund from 440 billion euros to 1 trillion euros ($1.4 trillion), actually quite close to what the markets said is needed, I’m hard-pressed to find anyone willing to concede it has any chance of even kicking the can down the road. The report card is already out and it’s a resounding F.

Headlines in the Wall Street Journal this morning: “Doubts Rise on EU Deal” “U.S. Still at Risk”; “For Greeks, Bailout Means Years of Hardship”. 

And in Barron’s: “Misgivings About the Rally”; “Why a Big Rally Can Stir Its Own Kind of Worry”.

In the Financial Times:  “Fears on Contagion Persist”; “Italy Spoils Mood After EU Deal”; “Paris-Berlin Split Widens Over Deal”; “Euphoria Fades In Cold Light of Day”.

Expatica – Germany: “Euphoria Over EU Summit Deal Fades,”

About the only positive assessment seems to be from the rating agencies. Standard & Poor’s affirmed the long-term credit-rating of the rescue fund, the European Financial Stability Facility (EFSF) at AAA. In its assessment the rating agency says, “The outlook is stable.”, and it is almost certain that the AAA rated member governments will provide timely and sufficient extraordinary support to EFSF should it be required.  

To read my weekend newspaper column ‘The Wall of Worry Is Still There But Not As Foreboding!’ click here!

Short-Term Overbought..

As I noted in my column, a number of stock markets were made significantly overbought short-term (above their 50-day moving averages) by the spike up on Thursday.

Will a pullback from that overbought condition be the beginning of another leg down in a resumption of the summer correction?

Or will favorable seasonality, improvements in the U.S. economy, and the turn up by the 50-day m.a., result in the spike-up being the beginning of another typical winter months rally, with any pullbacks from overbought conditions only temporary blips on the charts?

Our intermediate-term technical indicators are providing us with quite clear indications of the answer.

Subscribers to Street Smart Report: In the subscribers’ area of the Street Smart Report website, there is an in-depth ‘Bonds, Gold, Dollar, Inflation’ report from Thursday, an in-depth ‘U.S. Market Signals and Outlook report’ from Wednesday, and an in-depth ‘Global Markets report’ from Tuesday.

Yesterday in the U.S. Market.

A mixed day to end a very positive week, no follow through to Thursday’s rally, but giving back almost none of the previous day’s big spike up either.

The Dow closed up 22 points, or 0.2%. The S&P 500 closed up 0.1%. The NYSE Composite closed down 0.1%. The Nasdaq closed down 0.1%. The Nasdaq 100 closed up 0.1%. The Russell 2000 closed down 0.6%. The DJ Transportation Avg. closed down 0.3%. The DJ Utilities Avg closed down 0.8%.

Gold closed down $2 an ounce at $1,744 an ounce, but up a big $105 for the week.

Oil closed down $0.48 a barrel at $93.48.

The U.S. dollar etf UUP closed up 0.1%.

The U.S. Treasury bond etf TLT closed up 1.1%.

Yesterday in European Markets.

European markets also closed mixed yesterday after their big rally on Thursday in response to the euro-zone summit agreement. The London FTSE closed down 0.2%. The German DAX closed up 0.1%. And France’s CAC closed down 0.6%.

Global markets for the week.

A very positive week, mostly coming after the results of the euro-zone emergency summit were announced.

Premium Content Area.

For Street Smart Report subscribers only, used to provide additional info to that provided in the newsletter, mid-week reports, and hotlines.

To obtain access please click on the ‘Subscribe’ link. It will take you to an information page on subscribing to Street Smart Report, a subscription to which includes access to the premium content area of this Street Smart Post blog.

In the premium area today: Intermediate-term outlook for U.S. stock market.  & Gold.

Next week’s Economic Reports:

Next week will be another important week for potential market-moving economic reports, including the ISM Mfg Index, the FOMC meeting announcement, Bernanke’s Press Conference after the FOMC meeting, and the Big One!, the Labor Department’s Employment Report for October. 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.

To read my weekend newspaper column ‘The Wall of Worry Is Still There But Not As Foreboding!’ click here!

Subscribers to Street Smart Report: In the subscribers’ area of the Street Smart Report website, there is an in-depth ‘Bonds, Gold, Dollar, Inflation’ report from Thursday, an in-depth  ‘U.S. Market Signals and Outlook report’ from Wednesday, and an in-depth ‘Global Markets report’ from Tuesday.

I’ll be back with the next regular blog post on Tuesday morning at 9:25 a.m. Have a great weekend!

Non-subscribers: How are you doing so far in 2011? We can help, and at very reasonable cost! Market, sector, stock, gold, bond, and dollar buy and sell signals, short-sales, long-side and ‘inverse’ etf’s, mutual funds, two portfolios of recommended holdings (one modified buy and hold, and one market-timing). 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. Highly regarded and in our 24th 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.

This blog appears every Tuesday, Thursday, and Saturday morning!

**** End of Today’s post*****

That was a close call.

As late as last evening it was looking like the euro-zone summit was going to be a dismal failure. The headlines in this morning’s Financial Times, which must have had to go to print late last night, were still that “Bond-holders resist write-down”, “Doubts Rise Over Rescue Fund Firepower”.

We’ll never know what a failure of the summit would have done to global stock markets that have been rallying on hope that something good would come from the meetings.

Because officials apparently worked late into the night and did hammer out an agreement that has possibilities.

Briefly, holders of Greek bonds, mostly international banks and financial firms, agreed to take a 50% write-down on the bonds as their contribution toward resolving the debt crisis. And agreement was reached by the 17 nations to increase the European bailout fund, the European Financial Stability Facility, to around 1 trillion euros ($1.39 trillion), not as much as hoped for but more than many thought was possible.

Numerous details still need to be revealed, which will keep the talking heads in business debating the pros and cons and shortfalls of the agreement. But stock markets, usually more accurate than the talking heads in their assessments, like the news.

Global stock markets, particularly in Europe, are surging on the news. The DJ Asia-Pacific Index closed up 2.9% last night, and the markets in Germany and France are up more than 5% this morning.

The important questions now will be which markets and sectors will most likely outperform.

Bonds are one area we are fairly certain will not perform well as a result.

It should be alright with paying subscribers if we reveal at this point that we have been on a sell signal for U.S. treasury bonds, with a position in an ‘inverse’ bond etf designed to make gains when bonds prices decline.   

Bonds rallied as a safe haven when the stock market was in its summer correction, and also as the stock market became so wildly volatile. But since the stock market’s low in early October, bonds have been selling off, managing positive closes only on days when the stock market closed down.

Not a Bad Forecast So Far.

Last December our forecast for 2011 was: “An early correction of some degree, a temporary recovery, then a more significant correction in the market’s unfavorable season to a low sometime in the October-November time-frame, followed by a substantial rally off the low to produce a positive year.”

So far it has worked out pretty much on the button and we have outperformed the market by both being in cash in our Seasonal Timing Strategy during the unfavorable season and so not giving back its gains of last winter, and being back in at the re-entry signal in October, and in our non-seasonal Market-Timing Strategy portfolio by playing the downside with ‘inverse’ etf’s during the summer correction (as well as playing both sides of the bond moves).

We don’t know how the rest of the year will play out but will trust our technical indicators.

Economic reports continue to mostly improve.

As we have been noting over the last several weeks there have been some encouraging signs in recent U.S. economic reports, enough that worries about the economy sliding back into recession have subsided.

Yet, it’s far from an all clear on the economy.

We were particularly dismayed by Tuesday’s report that the Conference Board’s Consumer Confidence Index plunged in October to 39.8 from 46.4 in September. The consensus forecast was that it would remain at around 46. When the economy is growing consumer confidence usually runs at 90 or higher. The last time it was around 39.8 was in March 2009 during the 2007-2009 recession. Yet in spite of the plunging consumer confidence retail sales have been holding up well.

And yesterday’s report that Durable Goods Orders fell 0.8% in September versus a decline of 0.1% in August was also not encouraging, at least looking at the headline number. However, the decline was mostly due to a big drop of 7.5% in demand for commercial aircraft and autos. Durable Goods Orders ex-transportation actually rose 1.7% in September versus a decline of 0.4% in August. And orders for ‘core capital goods’ which leave out volatile defense and transportation, and thus are a better indication of trends in the private sector, were up 2.4%.

And it was also reported yesterday that new home sales increased by 5.7% in September, while the inventory of unsold new homes fell to a 6.2 month supply at current sales levels, the lowest level since April, 2010.

This morning came a more important report backing up the improvement in the individual reports. That was the report on 3rd quarter GDP growth, which showed that economic growth accelerated in the 3rd quarter, GDP coming in at an annualized rate of 2.5%, after only 1.3% in the 2nd quarter, moving nicely away from the recessionary trend.

To read my newspaper column from last weekend ‘If Only We Could Ignore Europe!’ click here!

Subscribers to Street Smart Report: There is an in-depth ‘U.S. Market Signals and Outlook report’ from yesterday, a hotline from 7 a.m. this morning, and an in-depth ‘Global Markets report’ from Tuesday, in the subscribers’ area of the Street Smart Report website. And there will be a new in-depth  ‘Bonds, Gold, Dollar, Inflation’ report later today.

Yesterday in the U.S. Market.

A partial recovery from the previous day’s sharp sell-off, in spite of continuing concerns about whether the eurozone summit would come up with a meaningful agreement.

The Dow closed up 162 points, or 1.4%. The S&P 500 closed up 1.3%. The NYSE Composite closed up 1.4%. The Nasdaq closed up 0.5%. The Nasdaq 100 closed down 0.1%. The Russell 2000 closed up 1.9%. The DJ Transportation Avg. closed up 0.3%. The DJ Utilities Avg closed up 0.7%.

Gold closed up $12 an ounce at $1,723.

Oil closed up $1.14 a barrel at $91.34.

The U.S. dollar etf UUP closed down 0.1%.

The U.S. Treasury bond etf TLT plunged 1.8%.

Yesterday in European Markets.

Markets in Europe gave up earlier gains to close mixed yesterday. London closed up 0.5%. The German DAX closed down 0.5%. France closed down 0.2%.

Asian Markets Surged Up Last Night.

The DJ Asia-Pacific Index closed up 2.9%.

Among individual markets:

Australia closed up 2.4%. China closed up 0.3%. Hong Kong closed up 3.3%. India closed up 0.2%. Indonesia closed up 2.0%. Japan closed up 2.0%. Malaysia closed up 1.2%. New Zealand closed up 0.2%. South Korea closed up 1.5%. Singapore closed up 2.8%. Taiwan closed up 0.4%. Thailand closed up 2.3%.

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In the premium content area today: U.S. Market. Bonds.

Markets This Morning.

European markets are surging higher on relief over the results of the euro-zone debt crisis summit. The London FTSE is up 3.2%. Germany’s DAX is up 5.3%. France’s CAC is up 6.0%

Oil is up $2.20 a barrel at $92.40.

Gold is down $2 an ounce at $1,721 an ounce.

This morning in the U.S. Market:

This week is a fairly heavy week for potential market-moving economic reports, including Consumer Confidence, Durable Goods Orders, New home Sales, and the first look at 3rd quarter GDP growth. 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.

Monday’s report was that the Chicago Fed’s National Business Activity Index remained negative in September but improved to minus 0.22 from minus 0.59 in August. The 3-month moving average rose to –0.21 from –0.28 in August, the 2nd monthly improvement, putting it a bit further away from the –0.70 that has marked the beginning of all the recessions since 1970.

Tuesday it was reported that the Housing Price Index showed house prices rose 0.2% in August. But the Conference Board’s Consumer Confidence Index was a shocker, showing consumer confidence plunged to 39.8 in October from the already dismal 46.4 reading in September.

Yesterday it was that Durable Goods Orders fell 0.8% in September after a decline of 0.1% in August. But orders for ‘core capital goods’ which leave out volatile defense and transportation, and thus are a better indication of trends in the private sector, were up 2.4%. And it was also reported yesterday that new home sales increased by 5.7% in September, while the inventory of unsold new homes fell to a 6.2 month supply at current sales levels, the lowest level since April, 2010.

This morning’s reports are that new weekly unemployment claims fell by 2,000 last week. And more importantly the first reading on 3rd quarter GDP growth was that the economy grew 2.5% after only 1.3% in the 2nd quarter, moving away from the recessionary trend.

Still to come is the Pending Home Sales report, which will be released at 10 a.m.

Pre-open indicators are very positive.

Our Pre-Open Indicators:

Our pre-open indicators are now pointing to the Dow being up 250 points or so in the early going.

To read my weekend newspaper column ‘If Only We Could Ignore Europe!’ click here!

Subscribers to Street Smart Report: There is an in-depth ‘U.S. Market report’ from yesterday, a hotline from 7 a.m. this morning, and an in-depth ‘Global Markets report’ from Tuesday in the subscribers’ area of the Street Smart Report website. And there will be a new in-depth ‘Bonds, Gold, Dollar, Inflation’ report later today.

Non-subscribers: How are you doing so far in 2011? 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 Saturday morning with the regular Saturday morning post, as usual later than the week-day posts, probably around 11 a.m. (This blog appears every Tuesday, Thursday, and Saturday morning!).

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