Join        Login             Stock Quote

Stock Market Opening Report - Jan 02, 2013

 January 03, 2013 09:12 AM

Stocks popped on a fiscal cliff deal to extend almost all of the Bush tax-cuts permanently. The new, higher taxes on incomes of $450k a year or more, plus a phasing out of deduction on income exceeding $300k is expected to add $620 Billion in revenue during the next 10 years. It probably won't and the additional revenue for 2013 has already been spent on the "doc fix" for Medicare, and extended unemployment benefits.

Wall Street celebrated the "good news" by pushing the Dow up 2.35%, the S&P 500 2.54%, and the NASDAQ by a touch more than 3%. The thrust put the S&P within striking distance of its 52-week high, but one new high isn't enough in iStock's view. We need confirmation of from the NASDAQ and Dow, too. Otherwise, investors could get ticked into full bull mode right as potential, technical danger reaches a peak.

[Related -Pick a Valid Strategy, Stick With It]

All three major indexes need to surpass September's peak; otherwise, a failed rally to new heights could lead to a major sell-off. On the other hand, three-for-three bypassing 52-week highs would be extremely bullish.

Wednesday's action is a little worrisome as the indexes gapped up at the opening bell. Gaps can be strong positives or nasty negatives depending on the next move. At times, gaps come in the form of breakaway, which means the fuse is lit for a bull run. On the tail-side of the coin, if the market struggles to add to gains, odds are the gap will be closed and stocks give up most of the day's advance.

The good news is that investors should know which way the market will go by Friday's closing bell. The run higher should continue as long as the NASDAQ stays above 3,080ish. If the index wiggles and closes too far below 3,080, the gap will likely close to 3,020ish.

[Related -How to Prepare For A Correction Without Missing Out On Upside Potential]

Three economic reports of interest will be released Thursday, ADP's jobs report, Jobless Claims and the FOMC's minutes. ADP's report is a precursor to Friday's Employment Situation report. Economists anticipate 150,000 new jobs were created in December. The trend has been flat around 150,000, but we think the range of estimates creates room for an upside surprise; although, many experts thought the fiscal cliff dance may have hampered hiring. We think not.

Holiday week Jobless Claims are almost useless as many states don't forward data and the number is a guesstimate, and on which side do you expect the federal government to err? iStock believes the number will be less than the consensus of 363,000.

Finally, at 2 pm EST, the FOMC's minutes will be released. Wall Street will pour through the notes for clues on the Fed's next move. Hint – it will be print, print, print and zero interest rates for as long as possible or until Yahoo's Macke can no longer get a 60" flat screen with a smile.  

iOnTheMarket Premium


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

rss feed

Latest Stories

article imagePick a Valid Strategy, Stick With It

I’m not going to argue for any particular strategy here. My main point is this: every valid strategy is read on...

article imageHow to Prepare For A Correction Without Missing Out On Upside Potential

Recent market commentary is starting to remind me of the periods in 2000 and 2008 just before the bottom read on...

article imageBritain’s Boom Can Still Zoom

Don’t overthink the disconnect between strong UK GDP and wobbly UK stocks. Economic fundamentals should win read on...

article imageA Serious Red Flag

Stocks have stayed largely in reverse gear in the last week following weaker-than-expected earnings reports 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.