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Weekly Market Recap – December 7, 2013

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Overview

This past week the markets were mixed, with the Dow and S&P down, and the Nasdaq up. Economic news was mostly favorable this week, with better than expected job growth and a reduction in the unemployment rate; however, there are demand and supply issues which could affect 4th quarter growth. The good news on Friday offset the initial losses that occurred throughout the week after a 4-day selloff.

There are signs of improvement in three major sectors: the labor market; housing; and manufacturing. Whether this improvement will be sufficient to initiate tapering will be a key discussion for the 12/18 FOMC Statement. Much of the growth in the last quarter came from a big increase in private sector inventories; and unless there is a consummate growth in demand for goods, there will be a drop in GDP for the last month.

Expectations continue with Asset Managers buying dips till year-end.

Market Gauge

Year-to-date the markets are up: Dow 22.3%; S&P500 26.6%; Nasdaq 34.5%.

The Markets for the past week were: DJIA down -0.4%; S&P500 down -0.0%; Nasdaq COMP up 0.1%.

Commodities (ETFs) for the past week were: Gold (GLD) down -1.78%; Silver (SLV) down -2.49%; Oil (OIH) down -0.56%; Dollar (UUP) down -0.55%; 30-yr Bonds rose 8 basis points to 3.89%.

The VIX this past week (a measure of market sentiment and volatility) rose slightly to 13.79 due largely to profit taking during the week.

Top Headlines

In the U.S., Apple rolls out shopper-tracker iBeacon; Barnes & Noble being investigated by SEC; taper tamper as jobs creation climbs; consumer sentiment jumps amid improved outlook; Sears to spin off Lands' End business; 'no bread lines in US' says influential investor Dennis Gartman about wage debate; JCPenney gets SEC inquiry regarding its financial position; US judge weighs lower penalties for BofA fraud; debating the effects of a $15 fast food wage; no time online as shoppers rush to actual stores; it's Chicago's turn to press pension funds; US fast food workers strike for higher hourly wage; Apple signs deal with China Mobile; Google puts money on new generation of robots; Supreme Court reluctant on frequent-flier lawsuit; Chinese are snapping up US real estate; and mortgage applications are taking a holiday.

In Europe, Europe's Christmas tree 'Black Friday'; resilient euro just won't be held back; Bundesbank raises growth outlook for Germany; Deutsche Bank quits commodities; ECB expects inflation will be below target for 2 years; a UK tax on foreign homebuyers to send 'shivers down the spine'; euro zone and UK's faint signs of growth; US and Europe still positive on WTO deal prospects; BoE hold fire after growth forecast upgrades; Deutsche Securities employee, client arrested in Japan; Britain to give all-clear to Huawei security center; Deutsche: 2 billion ways to say we're sorry; Cyprus sees more stability, even bitcoin innovators; finance minister Pierre Moscovici says France must invest in Africa; China and UK in $74 million pig semen export deal; S&P's Morita Kraemer: Europe not out of the woods; Greece's doctors to get dose of austerity medicine; UK economy goes from 'zero to hero' but don't expect giveaway; and Germany seeks protection for historic beer law.

In Asia, US journalists pressured to leave China; China's biggest jeweler sees gold in the masses; Japan Cabinet approves stimulus package; China air zone pushes Asia to brink; China central bank warns banks against bitcoin; Singapore real estate may be losing its shine; Mobile payments gain traction among India's poor; time to get picky on China stocks, says HSBC; Qantas share slump 17% on profit warning; Hong Kong IPO market springs back to life; China opens door to Apple with 4G mobile licenses; bullion smuggling outstrips narcotics in India; Australia makes backup plans amid shaky WTO talks; strain over security zone evident in Biden talks; China to start rolling out free trade zone reforms; Singapore and Hong Kong exchanges team up on yuan; 'universal' frustration with India reforms, says Hero CEO; can India and Indonesia tough out Fed tapering?; Australia's third-quarter GDP data disappoints; and Japan economic package to total $182 billion.

Weekly Review

On Monday, with strong manufacturing data raising concerns over tapering, the Dow dropped -0.5% to 16,008 after testing 16,000. Gold slipped $20 to $1,220.

On Tuesday, with little news and profit taking, the Dow dropped -0.6% to 15,914. Gold held at $1,220; Oil rose $2 to $96.

On Wednesday, with mixed economic news, the Dow dropped fractionally to 15,889. Gold jumped $25 to $1,245.

On Thursday, with a better-than-expected GDP based primarily on growing inventories, the Dow dropped -0.4% to 15,821.

On Friday, with a strong jobs report and a sharp drop in the unemployment rate, the Dow rose 1.2% to 16,020.

Next Week's Calendar

The economic calendar for next week is light: on Monday – FedSpeak; on Tuesday – nothing; on Wednesday – EIA Petroleum Status Report, Treasury Budget; on Thursday – Weekly Jobless Claims, Retail Sales, Import and Export Prices, Business Inventories; and Friday – Producer Price Index.

If the Markets move down, stay on the side lines or consider Contra ETFs. For Option players, selling premium is advised. To learn more about options and earning consistent weekly income, go to optionsannex.com.

To the Charts

The following ETFs (DIA, SPY, QQQ) provide a technical review of the Market (and are also excellent Option trading vehicles). Represented are the Dow Industrials (DIA), S&P500 (SPY), and Nasdaq 100 (QQQ).

The Charts for each include views for Monthly, Weekly (including Price Channels), and Daily (including monthly Pivot Points) with MACD and Stochastic indicators. The Pivots are: white for central pivot point; yellow for R1 and S1; magenta for R2 and S2; red for R3 and S3.

DIA

See chart

The Dow Industrials (DIA) closed down at 160.16. If the DIA drops, then the next level of support will be at 146.96 (weekly chart); the next level of major resistance is 161.58 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving up above the overbought area.

The weekly chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving down above the overbought area.

The daily chart indicates a bearish posture (down Arrow) with the MACD positive and strengthening, and the Stochastic moving down above the oversold area.

SPY

See chart

The S&P500 (SPY) closed down at 180.94. If the SPY drops, then the next level of support will be at 164.53 (weekly chart); the next level of major resistance is 184.75 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving up above the overbought area.

The weekly chart indicates a bullish posture (up Arrow) with the MACD positive but weakening, and the Stochastic moving up above the overbought area.

The daily chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving down at the midpoint.

QQQ

See Chart

The Nasdaq 100 (QQQ) closed up at 86.00. If the QQQ drops, then the next level of support will be at 76.35 (weekly chart); the next level of major resistance is 86.21 (weekly chart).

The monthly chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving up above the overbought area.

The weekly chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving up above the overbought area.

The daily chart indicates a bullish posture (up Arrow) with the MACD positive and strengthening, and the Stochastic moving down above the overbought area.

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