Dow - 67.32 I Nasdaq - 12.84 I S&P 500 - 6.13
Market Wrap
(Briefing):
The final trading day of 2005 was dominated by selling action that locked the major averages within a very tight, red range. Wedged between two holiday weekends, thin volume characterized the past five sessions and particularly Tuesday's as many participants got an early start to the New Year' weekend. The lack of catalysts due to a taciturn corporate front and a blank economic calendar helped to further hinder buying efforts. While the market's disposition was decidedly bearish, losses were somewhat kept in check and likely driven by year-end portfolio adjustments. In the end, though, Tuesday's action did little to change the indices' 2005 statuses: Each ended on positive ground, and the S&P clung to the 3.5% with which it entered the session. Although that's not the best of returns, it's the third consecutive year during which the market has risen.
A lack of leadership left the market stunted. Somewhat bucking the bearish bias was Energy. A 1.2% rise in the price of crude helped incite some buying interest, and last-minute portfolio additions of the market's best-performing sector likely provided added support. Ultimately, though, its 0.3% gain could not effectively counter the losses levied by the nine other sectors. Dragged by profit-taking within the diversified metals and mining industry, Materials (-0.8%) led the laggards. It was a trio of declines posted by the market's three heaviest sectors -- Financial (-0.4%), Technology (-0.6%), and Healthcare (-0.7%) -- however, that can be largely credited with Tuesday's slide. The Treasury market continues to loom as equity traders' focal point, and, although this week's yield curve inversion came as little surprise and on conviction-lacking volume, another session of the two-year note's yield surpassing the 4.39% offered by the 10-year especially weighed upon the Financial sector. To that end, banks posed a particular challenge. On a related note, Citigroup (C 48.68 +0.10) wasn't helped by news that it's upped its bid for state-owned Chinese lender Guangdong Bank to $3 billion. Regading the Tech sector, Intel (INTC 24.94 -0.13) had lent some modest support in the early going, following reports of its marketing makeover, but too fell victim to pervasive selling.
While the crude action had initially appeared overlooked, the Discretionary sector (-0.6%) eventually responded to the commodity's rise over $61 per barrel. The story there was a similar one of wide-spread selling. General Motors (GM 19.35 +0.34 ) stood as its brightest spot; seemingly paradoxical, its year-long weakness doubled as its strength Tuesday. The Dow component is the first since 2002 to have lost 50% or more over the course of a year. At the same time, with a 10.3% dividend yield, GM tops the 2006 Dogs of the Dow list and may have, for that reason, attracted some buyers Tuesday...NYSE Adv/Dec 1302/1955...NASDAQ Adv/Dec 1325/1751.
Trade system guidelines only available to newsletter subscribers
1.
MDR - MCDERMOTT INTL
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 01-03-06 |
|
Long |
Above 15 high |
Sell 1/2 once risk covered |
Below LOD at time of setup |
|
|
* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 44.85
|
2.
SBUX - STARBUCKS
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 01-03-06 |
|
Short |
Below 15 low |
Cover 1/2 once risk covered |
Above HOD at time of setup |
|
|
* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 29.94
|
3.
EBAY - EBAY
| Entry Date |
Exit Date |
Position |
Entry Price |
Target Price |
Stop Price |
Max P/L |
| 01-03-06 |
|
Short |
Below 15 low |
Cover 1/2 once risk covered |
Above HOD at time of setup |
|
|
* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 43.22
|
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EOD = End of day.
LOD = Low of day.
PDC = Previous Day's Close.
S/R = Support/Resistance.
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