Posts Tagged ‘The Leong Side of the Market’
In 2010, small-caps were the runaway winners, with the Russell 2000 closing up 25.28%. Technology also provided some decent gains, with the NASDAQ up 16.88%. Lagging were the blue-chip DOW and S&P 500 companies, which ended up 11.02% and 12.74%, respectively. U.S. stocks outperformed the Chinese Shanghai Composite Index (SCI), which closed down 14.31% following stellar gains in 2009.
Merry times are here. We’re happy. You’re happy. Wall Street is happy.
With the gains on Tuesday, the Santa Claus Rally appears to be in place, as long as we see gains in the last five trading days of the year, followed by the first two sessions in January. Historical records indicate that stocks have increased an average of 1.6% since 1969, according to the Stock Trader’s Almanac.
Santa appears to be on his way. We’re not there yet, but let’s hope it’s soon.
The charts of some of the key stock indices continue to look positive and point to more potential gains after the break at the previous chart tops. I’m encouraged by the ability of the major stock indices to edge higher after breaking the previous chart tops.
China is continuing to expand at rates well beyond the world’s other industrialized powers.
The Organization for Economic Cooperation and Development (OECD) predicts that China will grow its economy by 9.7% in 2011 and 2012, which, while lower than the previous rates, is still well above the global average of 4.2% and 4.6% in 2011 and 2012, respectively. In the third quarter, China’s GDP increased 9.6%.
Markets are continuing to edge higher after breaking above the previous chart tops, which is technically bullish. The DOW is 0.67% below its chart top, but I suspect this will be broken.
The break above the previous chart high may be sustainable, but failure to hold could leave stocks vulnerable to downside weakness.
Gold has edged higher in each of the past nine years, and it is set to close off its decade-long bull market. Buying has been driven by a combination of speculative trading in physical gold, gold ETFs, and buying as a safe-haven investment.
Chinese stocks are again the focus of increased attention and speculative trading. In China, the benchmark Shanghai Composite Index (SCI) was rallying and was down less than four percent this year, which is impressive given that the index had been down over 28% earlier in the year. Unfortunately, fortunes have turned, as there has been selling in Chinese stocks. The SCI is currently down 14.25% on the year.
But don’t tell that to the speculative and bubble-like trading in Chinese Initial Public Offerings (IPOs).
There have been some spectacular debuts that would make even Broadway happy.
On Wednesday, Chinese online video superstar Youku.com Inc. (NASDAQ/YOKU), which was subscribed at $12.80, surged to close at $33.44, up a staggering 161% in a day! YOKU is up another 10% in early morning trading on Thursday. I guess when the company has a 40% penetration rate in an Internet market with over 420 million, rich valuations are demanded.
The other Chinese IPO that also presented a dazzling debut on Wednesday was online book seller, E-Commerce China Dangdang Inc. (NASDAQ/DANG), sometimes referred to as the Amazon.com (NASDAQ/AMZN) of China and you know how AMZN has done in trading. DANG was subscribed at $16.00, and nearly doubled to $30.55 in trading on Thursday morning.
Prior to YOKU and DANG, there were several new Chinese IPOs coming to the market that debuted well above the IPO price and surged. These included Country Style Cooking Restaurant Chain Co., Ltd. (NASDAQ/CCSC), an operator of fast-food eateries. The stock was priced at $16.50, but debuted at $25 on September 28 and surged to $36.45, before settling back to … Read More
If you need sure-bet plays in retail, you have to stick with Wal-Mart Stores, Inc. (NYSE/WMT) and Costco Wholesale Corporation (NASDAQ/COST).
Costco delivered with strong results on Wednesday, after posting earnings of 312 million dollars, or $0.71 per diluted share, above the consensus estimate of $0.69 per diluted share, according to Thomson Reuters.
The bulls appear to be in full control at this juncture.
On the charts, the NASDAQ has joined the Russell 2000 to move above their respective previous chart highs. This is bullish, but we need to see if the indices can hold.
Over two million workers lost their unemployment claims yesterday. And now to make matters worse, the highly anticipated non-farm payrolls were dismal. In what was a shock, we saw non-farm payrolls generating a mere 9,000 new jobs, which is way below the estimate of 150,000 new jobs. Moreover, the unemployment rate surged to a surprising 9.8%, well above the estimate of 9.6%.
So, what happened?
The key in China will be the rapid growth of the country’s middle class. In a recent research finding, Credit Suisse predicted that the household wealth in China will double to $35.0 trillion by around 2015, based on achieving sustainable GDP growth at or near the current growth rate.
Yet, with the key non-farm payrolls due out on Friday, traders got an early gift on Wednesday when the private ADP Employment Change report came in at a strong 93,000 new jobs created in November, well above the 58,000 jobs estimate and the highest reading in three years. The October reading was also revised upwards. The reading is generally viewed as a precursor to the non-farm payrolls reading.
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