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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

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Friday, December 30, 2011

2011 Market Wrap-up

2011...what a year! A year of social unrest, demonstrations, riots, government overthrows, mass murders, earthquakes, tsunamis, floods, nuclear reactor meltdowns, political discord, economic distress (the "R" word has resurfaced), austerity, financial weakness, credit rating downgrades, volatility, financial fraud, law suits, assassinations, and the passing of Steve Jobs...no wonder the markets have been so reactive (sometimes quite violently) rather than proactive in a measured manner.

Here's a look at how some markets closed out 2011...actually, I'm a bit surprised that the U.S. Equity Market Indices aren't down more, considering the above turmoil...perhaps they've been artificially elevated...

The Dow Utilities Index was the big gainer among the Dow 30, Dow Transports, S&P 500, Nasdaq 100, and Russell 2000 Indices, as shown on the Year-to-date graph below (courtesy of www.Stockcharts.com).

The second Year-to-date graph below shows that these Major Indices are all at some form of trendline resistance.

The European Financials ETF, EUFN, was the biggest loser among the Commodities ETF, DBA, the Agricultural Commodities ETF, DBC, the Emerging Markets ETF, EEM, the U.S. Financials ETF, XLF, and the Chinese Financials ETF, GXC, as shown on the Year-to-date graph below.

The second Year-to-date graph below shows that, although DBC has stabilized, DBA has not and is still in downtrend...EEM is in between triangle support and resistance...and XLF, EUFN & GXC are in between triangle support and resistance.

The U.S. $ was the biggest gainer among the Euro (the biggest loser), the Canadian $, the Aussie $, and the British Pound, as shown on the Year-to-date graph below.

The second Year-to-date graph below shows that the U.S. $ is at near-term resistance, the Euro is still trending down, the Canadian and Aussie $ are in between triangle support and resistance, and the Pound is at near-term support.

Oil and Gold were the biggest gainers compared to Copper, as shown on the Year-to-date graph below.

The second Year-to-date graph below shows that Oil is at resistance, while Gold is just above support, and Copper is in between triangle support and resistance.

The VIX ended up nearly 32%, as shown on the Year-to-date graph below.

The second graph shows that the VIX ended just above major support and just below near-term resistance. It ended the year up, compared with a neutral ending for equities...an interesting correlation...and one to watch...not all may be as stable as may appear from the Equity Indices...particularly in view of the 170% increase in volatility that we saw in August.

The biggest gainers of the year, overall, were Dow Utilities, Oil, Gold, and the U.S. $, with U.S. Equities ending generally neutral, the Euro the biggest currency loser, Emerging Markets a big loser at nearly 19%, Copper a big loser at 24%, and Financial markets (U.S. and Chinese), especially the European (at 27%), the biggest losers.

The question will be whether stability returns to the European markets and whether recent stability can hold and improve in Emerging Markets for 2012, or whether volatility (VIX) will rise again...the VIX is still elevated, so there is a good possibility that it will. No doubt, all market action will be reflective of upcoming world news events, as well as consumer and investor sentiment, together with risk vs safety appetite. A couple of gauges that I'll follow in this regard are the VIX, U.S. $, and Copper, as well as the other instruments noted above. Without benefit of major Fed QE intervention, I imagine that next year could be range-bound...within this year's high and low, generally...although unforeseen catastrophes could send the Major Indices below this year's lows. As I noted in my post of September 30th, 2011, major support levels for the Major Indices are: http://strawberryblondesmarketsummary.blogspot.com/2011/09/who-won-pinball-game-in-3rd-quarter-of.html
  • Dow 30 - 10000
  • S&P 500 - 1050
  • Nasdaq Composite - 2100
  • Russell 2000 - 550

I hope that 2012 blossoms into much peace, prosperity and happiness for each of you! Thanks to all who have shared their insight and from whom I've learned a great deal. A huge thanks to my trading friends for your kind support this year...you helped me keep my sanity...Smudge is very grateful for that! :-)