THE MARKETS
How do you spell market rally? How about "Jobs."
A much higher than expected 243,000 jobs were added to our
economy in January and that helped push the Dow Jones Industrial
Average to its highest close since May 2008, according to
Bloomberg. On top of that, the unemployment rate dropped to 8.3
percent - the lowest since February 2009.
More good economic news came from the services sector as the
pace of growth in January accelerated to its highest level in
nearly a year, according to the widely followed index from The
Institute of Supply Management and reported by CNBC.
While the overall economy has gained some momentum lately, the
housing market is still stuck in the gutter. According to data
released last week, the S&P/Case-Shiller index of home prices
in 20 major cities declined 3.7 percent in the 12 months ending
November 2011. Since its 2006 peak, average homes prices in the
index have dropped 33 percent and prices are now back to where they
were in mid-2003.
On the bright side, if you're looking to buy a house or
refinance, now is a great time. The average rate on a 30-year
fixed-rate mortgage fell to 3.87 percent last week. That's an
all-time record low, according to MarketWatch.
Overall, after a scare back in the fall of 2011, the economy
seems to be gaining steam and stock prices have reflected that. The
big question remains… is this sustainable growth or is it
temporarily driven by government stimulus and intervention?
|
Data as of 2/3/12
|
1-Week
|
Y-T-D
|
1-Year
|
3-Year
|
5-Year
|
10-Year
|
|
Standard & Poor's 500
(Domestic Stocks)
|
2.2%
|
6.9%
|
2.6%
|
17.1%
|
-1.5%
|
2.1%
|
|
DJ Global ex US
(Foreign Stocks)
|
2.5
|
10.1
|
-10.3
|
15.9
|
-3.7
|
5.9
|
|
10-year Treasury Note
(Yield Only)
|
2.0
|
N/A
|
3.5
|
2.8
|
4.8
|
4.9
|
|
Gold
(per ounce)
|
0.5
|
10.1
|
30.6
|
24.2
|
21.7
|
19.7
|
|
DJ-UBS Commodity Index
|
-0.7
|
3.5
|
-11.4
|
9.9
|
-2.5
|
5.0
|
|
DJ Equity All REIT TR Index
|
2.1
|
9.0
|
12.5
|
32.1
|
-1.5
|
11.1
|
| Notes: S&P 500, DJ Global ex US, Gold, DJ-UBS
Commodity Index returns exclude reinvested dividends (gold does not
pay a dividend) and the three-, five-, and 10-year returns are
annualized; the DJ Equity All REIT TR Index does include reinvested
dividends and the three-, five-, and 10-year returns are
annualized; and the 10-year Treasury Note is simply the yield at
the close of the day on each of the historical time
periods.Sources: Yahoo! Finance, Barron's, djindexes.com, London
Bullion Market Association.Past performance is no guarantee of
future results. Indices are unmanaged and cannot be invested into
directly. N/A means not applicable or not available. |
CAN THE INTERSECTION OF TWO MOVING AVERAGES
foretell the future direction of the stock market? Chart watchers
like to follow what's called the 50-day moving average (50 DMA) and
the 200-day moving average (200 DMA). These are lines which plot
the closing price of the S&P 500 index for the last 50 and 200
days. When a new day is added, the oldest day is dropped off, hence
the term "moving" average.
The 200 DMA is supposed to reflect the longer-term "wave" or
trend in the market while the shorter 50 DMA captures the
shorter-term trend or momentum. How these two lines move relative
to each other is what gets chart watchers excited.
Last week, the 50 DMA crossed above
the slower moving 200 DMA. Market technicians refer to this as a
"golden cross." In layman's terms it's considered a bullish market
signal, according to CNBC. In fact, Birinyi Associates said that in
the 26 instances since 1962 when the 50 DMA crossed above the 200
DMA, the market was higher six months later 81 percent of the
time.
Not surprisingly, when the 50 DMA crosses
below the 200 DMA, there's a name for
that, too. It's called a "death cross" and it's supposed to signal
bad times ahead. However, the last two "death crosses," which
occurred on August 15, 2011 and July 2, 2010, were not very
prescient, according to The Wall Street Journal.
And, we can get further carried away with the funny technical
names by throwing in the "Hindenburg Omen." By its very name you
can tell it's not something you want to see in the markets, and,
we're happy to report, it is not being
signaled right now.
Okay, does all this technical stuff really matter? It matters to
the extent that some serious market participants invest based on
these technical signals and their buying and selling based on these
signals may affect the markets.
So, whether you believe in this type of market analysis or not,
it may be helpful to at least be aware of it.
WEEKLY FOCUS - Does this
make sense?
Of our five senses, which one do you think is most important?
Interestingly, if brain space indicates the importance of a sense,
then vision is the most important. According to The National
Geographic Society, roughly 30 percent of neurons in the brain's
cortex are devoted to vision. By contrast, just 8 percent are
devoted for touch and 2 percent for hearing.
For your convenience the sources have
been listed below:
http://www.bloomberg.com/news/2012-02-03/u-s-stocks-rise-a-fifth...
http://www.marketwatch.com/story/30-year-mortgage-rate-falls-to-r...
http://www.cnbc.com/id/46251738/
http://www.standardandpoors.com/servlet/BlobServer?blobheadern...
http://www.cnbc.com/id/46203721
http://online.wsj.com/article/BT-CO-20120201-707123.html
http://www.cnbc.com/id/38690976/?Time_to_Fear_the_Hindenburg...
http://channel.nationalgeographic.com/channel/brain-games/watch-t...
