ETF/No Load Fund Tracker StatSheet
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Friday, December 28, 2012
US STOCKS SINK AS BUDGET IMPASSE CONTINUES; EUROPE TRACKS LOWER
US stocks dropped for the fifth straight day, the longest losing streak for the Dow Jones Industrial Average since July, ending the week off nearly two percent after a report suggested President Barack Obama and Republicans failed to strike a deal to avert the so-called fiscal cliff Friday afternoon.
There was little reaction to better-than-expected economic news as investors followed the efforts to cut a last-minute budget deal. Pending home sales climbed for a third month in November, the National Association of Realtors announced.
A separate report showed business activity in the US expanded in December for the second straight month. The Chicago purchasing managers index rose to a four month high of 51.6 from 50.4 in November, easing concerns of a manufacturing slump due to the ongoing budget stalemate.
The Dow Jones Industrial Average (DJIA) sank 158 points to 12,938, down 1.9 percent from last Friday’s close while the S&P 500 Index (SPX) slipped 16 points to 1402, its biggest decline since November 14 and off 1.9 percent on a weekly basis.
The CBOE Volatility Index (VIX), the barometer of S&P option prices, vaulted 17 percent to 22.72, the highest reading since June 13. The gauge has gained 43 percent this month and is on the way to record its biggest gain since July 2011.
Treasury prices rose for a third day, pushing yields lower as hunt for safety boosted US debt while lawmakers struggled to reach a budget deal in Washington.
European stocks broadly moved lower in the last full trading week of the year (after a five week rally), as the logjam over US tax hikes and spending cuts remained unresolved on Friday.
Our Trend Tracking Indexes (TTIs) pulled back for the week and closed as follows:
Domestic TTI: +0.78% (last week +1.51%)
International TTI: +6.33% (last week +7.17%)
The continued fiscal cliff drama will be widely watched this weekend and if no agreement is reached, the market indexes may very well introduce the politicians to the real meaning of sliding down a cliff come Monday morning.
Happy New Year!
READER Q & A FOR THE WEEK
All Reader Q & A’s are listed at our web site!
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A note from reader Lou:
Q: Ulli: What is the significance of the 200 day M/A moving over the 50 day M/A?
A: Lou: You probably meant it the other way around; when the 50 day M/A crosses the 200 day M/A…
That is an old trend following signal that some investors use. If the crossing is to the upside, it is referred to as the ‘Golden Cross;’ if it’s to the downside, it is called the ‘Death Cross.’
Since both indicators are moving averages, the signals happen with quite some delay within a major trend. It’s considered the final confirmation that a bull market is in full force (Golden Cross) or that a bear market is upon us (Death Cross).
Personally, I think these signals get you in the market too late and out of them also only after a severe market retreat, which is why I don’t use them.
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