ETF/No Load Fund Tracker StatSheet
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Friday, December 7, 2012
EQUITIES RISE SLIGHTLY ON JOBS REPORT WHILE APPLE WEIGHS ON NASDAQ; EUROPE BOUNCES BACK
US stocks inched up today as optimism over better-than-expected November jobs data offset a drop in December consumer sentiment amid continuing budget negotiations in Washington.
A Labor Department report showed nonfarm payrolls increased by 146,000 last month before markets opened Friday, bringing down the unemployment rate down to 7.7 percent from 7.9 percent. That topped economists’ estimate of 80,000 job additions and an unchanged unemployment rate.
Of course, the job additions are pretty meaningless considering that they will be adjusted downward next month just like the figures for October were revised from 171,000 to 138,000 and for September from 148,000 to 132,000.
Along the same line, the reduction in the unemployment rate was simply a function of hundreds of thousands dropping out of the labor force. But that does not seem to matter; what matters is that right now the numbers make for a good headline.
Gains were briefly erased however after a gauge of consumer confidence decreased more than forecast. The University of Michigan-Thomson Reuters preliminary index of US consumer sentiment for December fell to 74.5 from 82.7 a month earlier.
Investors also watched developments in federal budget negotiations. The White House has wasted another week and there has been no progress on budget talks to avoid the fiscal cliff, House Speaker John Boehner said in a news conference.
The Dow Jones Industrial Average (DJIA) rose 81 points and extending its gains into the third consecutive week, the S&P 500 Index (SPX) added 4 points to end at 1418. The index is up 0.1 percent for the week.
Meanwhile, European stocks bounced back following US jobs data in the afternoon session, reversing earlier losses fueled by a downbeat assessment of the German economy.
The Stoxx Europe 600 index rose 0.1 percent to finish at 279.17, up 1.2 percent for the week.
Most stocks had traded in the negative territory earlier in the day after the Bundesbank said gross domestic product will grow by 0.7 percent this year, but growth will fall to 0.4 percent in 2013, significantly lower from a previous forecast of 1.6 percent.
Unemployment could rise to 7.2 percent next year from the current 6.8 percent, the German central bank warned. To make matters worse, data showed industrial production shrank by 2.6 percent in October, higher than predicted by economists.
After rising to its highest level in nearly five years, the DAX 30 index fell 0.2 percent. The index however added 1.5 percent for the week.
Our Trend Tracking Indexes (TTIs) moved their separate ways as the Domestic one retreated and the International one gained. Here’s how we ended up:
Domestic TTI: +1.78% (last week +2.13%)
International TTI: +5.60% (last week +4.71%)
Have a great week.
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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