While the major stock indices managed to muddle through Friday after Thursday’s modest advance, Miami-based corporations saw fat gains.
The three major stock indices managed to advance by approximately 30 basis points (0.30 percent) on Thursday, as a result of another “less bad” weekly report on initial unemployment claims:
In the week ending December 10, the advance figure for seasonally adjusted initial claims was 366,000, a decrease of 19,000 from the previous week’s revised figure of 385,000. The 4-week moving average was 387,750, a decrease of 6,500 from the previous week’s revised average of 394,250.
Nevertheless, bad news from Fitch Ratings concerning the European sovereign debt crisis took the steam out of Friday morning’s attempted rally. Kate Gibson of MarketWatch discussed that development, along with Friday’s reports on domestic economic data:
Fitch Ratings affirmed France’s top Triple-A credit rating, but warned of a potential downgrade for six other euro-using nations, placing Belgium, Spain, Slovenia, Italy, Ireland and Cyprus under review, calling a broad solution to Europe’s debt crisis “technically and politically beyond reach.”
A report showed the cost of living held flat in November, reassuring investors and bolstering the Federal Reserve’s take that inflation isn’t an issue for the economy.
U.S. consumer prices held flat last month as gas costs fell, while core prices that don’t take food and energy into account climbed 0.2%.
The Dow Jones Industrial Average declined by only 2 points on Friday, to close at 11,866 for a loss of 2 basis points (0.02 percent). The S&P 500 advanced by 32 basis points (0.32 percent) to finish at 1,219. The NASDAQ Composite picked up 56 basis points (0.56 percent) to end the day at 2,555.
Despite the restrained performance of the broader market, Miami-based corporations had a great day on Friday. Once again, Carnival Cruise Lines (CCL) led the group, rising by 2.42% to close at 33.87. Lennar (LEN) was next, with a gain of 2.01% to finish at 18.77. Royal Caribbean (RCL) rose by 1.84% to close at 25.96. Ryder System (R) advanced by 93 basis points (0.93%) to end the day at 50.76.
Our “thought for the day” comes from Richard Russell, author of The Dow Theory Today. What follows is a passage from his most recent edition of The Dow Theory Letter:
The great bear market rally is now about over, following a very long period of deceptive distribution. I am warning all my subscribers again that we are back in the grip of a vicious and ruthless bear. The bear has been held back for almost two years, due to the so-called quantitative easing of an anxious and ignorant Fed. There’s no bear angrier than a frustrated bear. As a result, I believe we’re going to see a brutal stock market that will shock the Fed and the bulls and the public — and all who insist on remaining in this bear market.
I think we’ll see selling of gold to cover losses (particular losses by the short sellers), but ultimately gold will be the last man standing. But most important — GET OUT OF STOCKS.
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Remember, the KEY number for the Dow is 10,000. Below 10,000, the bear really takes over. The early part of the resumption of the bear market will start very slowly and gingerly, and then later it will accelerate. Rallies will be frequent.
The following companies will be playing “beat the number” on Monday, with the release of their quarterly earnings reports: Red Hat Inc (RHT) and Shiloh Industries (SHLO). Good luck!