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Cease-fire lifts markets — it’s worth giving thanks on all fronts

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by Peter Switzer

Just when we thought that all market action was being driven by fiscal cliff anxiety or even optimism, along comes a cease fire agreement between Israel and Hamas in the Gaza Strip and up go stocks! That teaches you a bit about markets — they’re not always what they seem.

All of this as the Yanks go to Thanksgiving tomorrow and that’s another curve ball for the market, but I still believe that the fiscal cliff remains the market maker or breaker going forward. 

For the record, the Dow was up an unconvincing 48.38 points or 0.38 per cent to finish at 12,836.89 points, while the S&P 500 ended at 1,391.03 — up 3.22 points or 0.23 per cent.

My thoughts 

What I like is that this important investor indicator is sneaking away from an old resistance level around 1,385. That said, next week I’m sure cliff negotiations and a revision of GDP could have either positive or negative implications for stocks.

It could prove to be an important week for stocks going into December, which historically is great for share prices, especially in the second half.

Looking to next week 

I look forward to Lance Lai, my charts guy who comes on my Switzer program on the Sky News Business channel next week, as he has been on the money for a long time. What his charts tell him for December will make great reading. 

What is surprising me is the VIX or fear index down to 15 plus, which says investors are getting braver even with the fiscal cliff hanging over their heads! 

I reckon next week will be huge for the fiscal cliff negotiations.

What makes me feel good 

There were some EU-related worries over Greece but European markets were up, so I’m ruling this out as a big concern. 

On the US economy, consumer sentiment rose again. 

On the economic front, the Reuters/University of Michigan Consumer Sentiment Index rose again, jobless claims fell and leading indicators were up. All good news for someone like me, who believes in the US economic recovery, which will underpin stock price increases into 2013.

On the Yankee front

On top of that, CNBC says American “manufacturing grew at its fastest pace in five months in November, according to financial information firm Markit's U.S. "flash" manufacturing PMI.”

Outlook for 2013

Looking at all this, provided we don’t get a massive curve ball out of some place like the Middle East and the fiscal cliff can be made safe, then 2013’s start of the year will be good for stock market players.

It’s great for humanity that Gaza has a ceasefire but the fiscal cliff, for now, is the main market game.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Thursday, November 22, 2012

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