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February 02, 2012 at 09:38 AM EST
Eurozone Crisis Fading From Headlines.
Thursday, February 2, 2012. 9.25 a.m. The economy has been recovering from the Great Recession for three years now. And although it’s an anemic global recovery the U.S. has been leading the way. Meanwhile, in its three-year bull market from the 2009 low, the stock market has doubled in value. Justifiably, since S&P 500 earnings [...]

Thursday, February 2, 2012. 9.25 a.m.

The economy has been recovering from the Great Recession for three years now. And although it’s an anemic global recovery the U.S. has been leading the way. Meanwhile, in its three-year bull market from the 2009 low, the stock market has doubled in value. Justifiably, since S&P 500 earnings have increased 125% since the end of 2009, their fastest expansion in a quarter century. The result of that is, in spite of having doubled in value in the bull market, the S&P is selling at a lower P/E ratio than before the bull market began.

It must be a puzzle to the doom and gloomers who were so sure in 2008 that the bailout of banks and automakers, and massive stimulus efforts were not only going to fail to rescue the economy but would send the U.S. into the next Great Depression and plunge the stock market further, into oblivion.

In spite of those dire predictions falling by the wayside, the big picture theorists have remained just as gloomy even as the economic recovery has been picking up momentum and the stock market has been rallying impressively off its October low.

This time is was that the eurozone debt crisis of the last two years would produce the Armageddon catastrophe they expected in 2008 from the bailout efforts.

And now even that prospect seems to be fading away. At least the fears seem to be fading from the headlines.

I can’t find any references to the eurozone crisis at all in The Wall Street Journal Online this morning, let alone the types of dire headlines of a few weeks ago. It’s all about the upcoming elections, the Facebook IPO, corporate earnings, and so forth, a return to normal news items.

The only eurozone stories in The Financial Times this morning, and they are on back pages, have headlines like ‘Italy’s Banking Retrenchment Offers Signals of Rebound Hopes’, and ‘Portugal Vows to Hit Reform Targets’, and ‘Britain’s Best New Export is Lessons in Intelligent Fiscal Policy.’

It’s just not easy to try to forecast the direction of the economy or stock market, in either direction, with big picture analysis. As I have said so often over the years, by the time they are supposed to have played out conditions have almost always changed.

I’ll just continue to let the market itself tell us what it’s going to do through technical analysis of support/resistance levels, overbought/ oversold conditions, reversals of money flow, and so forth.

20212c

To read my weekend newspaper column ‘Let’s Not Get Too Optimistic’ Click here. 

Subscribers to Street Smart Report: The new issue of the newsletter is in the subscribers’ area of the Street Smart Report website from yesterday.

Yesterday in the U.S. Market.

Almost made a new high. The Dow was up 152 points mid-day, but gave almost half of it back by the close, especially in the final minutes.

The Dow closed up 83 points, or 0.7%. The S&P 500 closed up 0.9%. The NYSE Composite closed up 1.2%. The Nasdaq closed up 1.2%. The Nasdaq 100 closed up 0.8%. The Russell 2000 closed up 2.1%. The DJ Transportation Avg. closed up 0.4%. The DJ Utilities Avg closed up 0.5%.

Gold closed up $7 an ounce at $1,747 an ounce.

Oil closed down $1.13 a barrel at $97.35 a barrel.

The U.S. Dollar etf UUP closed down 0.5%.

The U.S. Treasury bond etf TLT closed down 1.4%.

Yesterday in European Markets.

Markets in Europe closed sharply higher yesterday. The London FTSE closed up 1.9%. The German DAX closed up 2.4%. France closed up 2.1%.

Asian Markets Were Positive Last Night.

The Asia Dow closed up 1.0%.

Among individual markets:

Australia closed up 1.0%. China closed up 2.0%. Hong Kong closed up 2.0%. India closed up 0.8%. Indonesia closed up 1.3%. Japan closed up 0.8%. Malaysia closed up 1.1%. New Zealand closed up 0.4%. South Korea closed up 1.3%. Singapore closed down 0.1%. Taiwan closed up 1.4%. Thailand closed up 0.5%.

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Markets This Morning.

European markets are mixed with only fractional moves this morning. The London FTSE is down 0.2%. Germany’s DAX is up 0.1%. France’s CAC is up 0.2%

Oil is down $.13 a barrel at $97.22.

Gold is up $2 an ounce at $1,749 an ounce.

This morning in the U.S. Market:

This is a very heavy week for potential market-moving economic reports including the Chicago PMI, ADP Jobs Report, ISM Mfg Index, Factory Orders, and the Labor Department’s Employment Report for January. To see the full list click here, and look at the left side of the page it takes you to.

Monday’s report was that U.S. Incomes were up an unexpected 0.5% in December, and Spending declined 0.1%, as savings rose 0.4%.

Tuesday it was the Case-Shiller Home Price Index, which showed that home prices fell 1.3% in November from October’s level. And the Chicago PMI dropped to 60.2 in January from 62.2 in December. And Consumer Confidence fell to 61.1 in January from 64.8 in December.

Yesterday it was the ADP Employment Report, which showed 170,000 new jobs were created in the private sector in January. And the number for December was revised down from the previously reported 325,000 to 292,000. And the national ISM Mfg Index rose to 54.1 in January from 53.1 in November, not quite as positive as the consensus forecast of an improvement to 54.5. But Construction Spending increased 1.5% in December, much better than the consensus forecast of a an increase of 0.3%. Meanwhile, the big-three automakers mostly reported positive sales gains in January, Chrysler a 44% increase over January a year ago, in its best January in four years, Ford sales were up 7% over a year ago. But GM reported its sales were down 6% from January of last year.

This morning’s reports were that new weekly unemployment claims fell by by 12,000 last week, to 367,000. The more important four-week moving average, which smooths out the weekly gyrations, fell by 2,000 to 375,750.  But the Challenger, Gray, & Christmas Lay-off Report was that U.S. companies announced planned layoffs in January surged to its highest level in four months. Meanwhile, the Labor Department Productivity Report showed that productivity in U.S. factories was up 0.7% in the 4th quarter, about in line with the consensus forecast. 

The pre-open indicators hade been fractionally negative but turned fractionally positive after the claims report.

Our Pre-Open Indicators:

Our pre-open indicators are pointing to the Dow being up 15 points or so in the early going.

To read my weekend newspaper column ‘Let’s Not Get Too Optimistic’ Click here.

Subscribers to Street Smart Report: The new issue of the newsletter is in the subscribers’ area of the Street Smart Report website from yesterday.

Non-subscribers: Past the time for a New Year’s resolution to improve on your investment returns in 2012? We believe we can help, and at very reasonable cost!

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I’ll be back Saturday morning with the regular Saturday morning post, as usual later than the week-day reports, probably around 11 a.m. eastern time. (This blog appears every Tuesday, Thursday, and Saturday morning!).

**** End of Today’s post*****

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