Join        Login             Stock Quote

New Party In China Promises Reforms

 December 05, 2012 03:38 PM

Our markets are lower again in early trading.  Traders are selling shares of AAPL which seems to be weighing on the Nasdaq the most.  One brokerage firm raised margin requirements on AAPL, but that doesn't seem to account for this much weakness.  AAPL has been down nearly 5% this morning.  I think the technical action in AAPL is not that out of the ordinary and would be a better buyer on the weakness vs. seller.

Asian markets were higher across the board overnight after China's new political party promised more economic reforms.  They indicate plans to invest in more urbanization and infrastructure as well as allowing insurance companies to invest in banks.  This helped China's stock market spike 2.9% and Hong Kong to rally +2.2%.  In other news, Australia said Q3 GDP rose +0.5%.

[Related -Bank Stocks: The Misbegottenness of the Volcker Rule Truly Knows No Bounds]

Europe's markets are generally higher despite another round of weak PMI Services readings.  Germany and Spain beat expectations while France  and Italy lagged.  Overall the Eurozone Services PMI came in at 46.7, which marks further contraction.  Only the UK reported a PMI reading above 50.0.

In the US, the ISM Services index was 54.7, ahead of estimates.  The ADP Employment report showed the private sector added 118,000 jobs in November, and this number was said to be hurt by Superstorm Sandy.  Last, nonfarm productivity showed an increase of 2.9% while unit labor costs fell by -1.9%, so those are both good trends.

In corporate news, Freeport (FCX) is buying both McMoRan Exploration (MMR) and Plains Exploration (PXP) in transactions totalling $20 billion.  But investors don't seem to like the foray into oil for this big copper producer as FCX shares are down -14% on the news.

[Related -Google Inc (GOOG): Why Nest Labs Deal Is A Wakeup Call For Apple Inc.?]

Citi (C) announced plans to cut costs and improve efficiencies which will also entail laying off 11,000 employees.  Its stock is rallying 5% on the news. 

The dollar is bouncing a bit which isn't helping commodities.  Gold has fallen below the $1700 level to $1690.  And oil prices are lower near $87.80.

The 10-year yield has slipped lower to 1.58%.  And the VIX was higher earlier but has since moved lower on the day down to the 16.70 level.

Trading comment: We talked about expecting a pullback once the SPX reached its overhead 50-day average.  That is exactly how things have played out so far this week.  Currently the SPX is back in neutral territory basically right in the middle of the range between its overhead 50-day average and its underlying 200-day average.  This push and pull should continue with the same political backdrop of fiscal cliff rhetoric and negotiations.  I don't see how the market makes much headway under this scenario.  But the market has been defying the bears and climbing the wall of worry most of the year, so nothing would really surprise us at the moment.  We are staying conservative and not making any big bets before year-end.

KAM Advisors has long positions in AAPL

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageThe Soda Industry Is Dying - But PepsiCo Will Thrive

Although diet crazes come and go, one trend has become clear: Americans are drinking less soda. Per-capita read on...

article imageDefensive Sectors Lead Hesitant Market, But Traders Honor Long-standing Bullish Support

Last week, the major indexes fell back below round-number thresholds that had taken a lot of effort to read on...

article imageWill Janet Yellen's Outlook Prevail?

Federal Reserve Chairwoman Janet Yellen told the crowd last week that rate hikes are coming. The rise will read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.