Dow’s 8 Week Run Ends

U.S. markets fell sharply with the Dow Jones and S&P 500 losing ground after an 8 week long winning streak. Investors are locking in gains with important data due out this week like the non-farm payroll. We have also gotten tepid sales data to start off the holiday buying season.

The National Retail Federation released their estimation for Black Friday sales at $57.4 billion. Down 2.7 percent from last year. The manufacturing numbers released yesterday came in better than expected. The Institute of Supply Management came in at 57.3 last month. This is up from 56.4 the month previous. We were expecting it to fall to 55.00.

STOCKS

The DJIA lost 77.64 points for the day after an 8 week long rally. The Blue Chip closed at 16,008.77. The S&P 500 also traded around its record close set back on November 27, before falling nearly 5 points to end at 1,800.90. Telecommunication stocks led losers. The Nasdaq Composite, which was up for six straight trading sessions. Lost 14.63 points to close the day at 4,045.26.

Asian markets, except for the Nikkei are all lower today. The Nikkei has hita new six month high after Bank of Japan Chair Kuroda added fire to the rumors the BOJ was ready for another round of stimulus. At a talk in Nagoya he said, “we are ready to adjust monetary policy without hesitation if risks materialize.” The Nikkei is up 0.6 percent to 15766.61 and trading back above 15,730. A weakening yen is also helping the benchmark as the USD/JPY is around 103.16.

The Shanghai Composite is also lower this morning by 0.5 percent. We are adding to yesterday’s two week low as investors continue to think about the recent change to the IPO market as well as some soft economic data as the PMI eased. The ASX 200 in Australia is down 0.4 percent after the Royal Bank of Australia left its key rate unchanged at its record low of 2.5 percent.

CURRENCIES

USD/JPY (103.288) here comes the bullish move we needed. We are now testing 103.70 which needs to break for a strong rally. We have near term support at 102.20 and another level at 102.

EUR/USD (1.3542) continues to show weakness after falling on Monday. We are near support at this level and if it holds can see a bounce higher. However, as long as 1.36 holds the bears are in charge. Expect a fall to 1.3460 or lower. GBP/USD (1.6367) is down a bit after its rally. Expected. We are bearish only below 1.6250. We remain bullish for 1.67 at this point.

COMMODITIES

The metals are all bearish.

Copper (3.2185) fell sharply to 3.175 before moving back up. Support at 3.15 held. If it continues to hold we could move to 3.25 but while below this level we are bearish. Gold (1220.80) has fallen sharply as we are targeting 1180. Silver (19.14) is also down and is aiming for 18.50.

TODAY’S OUTLOOK

Today is a rather soft day for data. Markets will be looking ahead to the ECB meeting as well as NFP due out later this week. Europe could track Asia and the U.S. markets as we saw profit taking today.