Market Report – January 28, 2013

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MicroCap Market Report: Another week at the office for U.S. stocks resulted in more gains and the S&P 500 posting its longest winning streak since 2004 as traders embraced mainly positive economic data. As we have been mentioning recently, a sanguine market environment bereft of discouraging political headline risk would be a boon for riskier assets and that has certainly been the case over the past few weeks.

Majors continue their climb

For the just completed week, the S&P 500, Dow Jones Industrial Average and NYSE Composite led a strong upward movement. The S&P 500 closed above 1,500 for the first time since late 2007 and is now in the midst of an eight-day winning streak, the benchmark U.S. index is on its longest consecutive winning run since 2004. The even better news is that nearly 150 S&P 500 companies have reported earnings so far and about three-quarters of them have topped Wall Street estimates.

Micro-caps enjoying the run too

Broader market bullishness has, of course, been good news for micro-caps. Last week, the iShares Russell Microcap Index Fund (NYSE: IWC) added another 0.62% and has gained close to 5% for Jan. The Guggenheim Wilshire Micro-Cap ETF (NYSE: WMCR) added 1.18% on the week and has soared 8% in the past 30 days.

The Markets @ 1/25/2013
Index Close Weekly % Change YTD Change YTD%
DJIA 13895.98 246.28 1.80% 791.84 6.04%
NASDAQ 3149.71 15 0.48% 130.2 4.31%
S&P 500 1502.96 16.98 1.14% 76.77 5.38%
NYSE Comp 8904.52 111.89 1.27% 461.01 5.46%
NYSE MKT  2412.93 21.49 0.90% 57.27 2.43%
RUS 2000 903.85 14.13 1.59% 54.5 6.42%
RUS MICRO 54.91 0.34 0.62% 2.59 4.95%
VANG INTL 48.05 0.32 0.67% 1.75 3.78%
CHINA INDEX 4592.39 -33.53 -0.72% 153.87 3.47%
EMERG MKTS 7265.86 -32.38 -0.44% 225.89 3.21%

Market Report

Another “Up Week” has investors smiling

The majors were led by a 1.80% gain in the DJIA which was up 246 points for the week. The NYSE Composite increased 1.27% and the S&P 500 added 16.98 points to close at 1502.96, up 1.14%.

Small caps were led by the Russell 2000 which gained 1.59% and is now up 6.42% YTD, which still leads all the indices we follow.

China continued its slide this week…the NASDAQ Golden Dragon China Index gave back 0.72%; but it’s still showing a 3.47% gain for 2013.

Our Emerging Markets Index couldn’t keep the momentum going either…and lost 0.44% for the week; but it’s hanging onto a 3.21% gain YTD.

The Dollar couldn’t sustain its gains from last week… the Euro rallied broadly on Friday amid growing optimism the region’s debt crisis has turned the corner

The US Dollar lost $0.0081 for the week, to close at 0.7428 Euros; bonds lost ground too…the 10-year bond gave back $0.91 to close at $97.14 and the 30-year bond lost $1.88 to close at $92.64.

Oil prices continued their move to the upside…WTI Crude Oil closed at $95.88, up $0.32 for the week.

Gold gives back a few bucks this past week (-$30.20 to close at $1,656.40) but don’t despair

I follow Chuck Butler’s “Daily Pfennig” letter and in his Friday post he had some comments you may find interesting, especially if you love the metals. Chuck said…

”Gold (Silver and Platinum) found some terra firma this morning, and hopefully the NY traders don’t upset the applecart when they arrive. I did see an article yesterday that quoted a Morgan Stanley report where they are telling people that Gold will rally this year and into 2014, as Fed policy makers will probably maintain asset purchases for two more years. They believe that the price of Gold will average $1,715 in the 1st QTR, $1,745 in the 2nd QTR, $1,800 in the 3rd QTR, and $1,830 by year end.
“Well, at least that’s a steady increase and not the lofty $2,000, $5,000 and beyond calls that we’ve seen! The Morgan Stanley report said it all, “we expect that very low nominal interest rates, an ongoing commitment to QE3 and a below-par recovery with attendant pressure on the dollar will still combine to encourage investment buying of Gold.”

To subscribe to Chuck’s daily email missive, click here:

In economic news, the National Association of Realtors said home sales fell 1% in December to a seasonally adjusted annual rate of 4.94 million units. Economists expected a gain of 5.1 million units on a seasonally adjusted basis. The inventory of existing homes for sale fell 8.5% to 1.82 million units in November.

First-time claims for jobless benefits fell by 5,000 last week to 330,000, a five-year low. Economists expected a reading of 355,000 claims. Continuing claims fell by 71,000 to 3.16 million. The Conference Board said its index of leading economic indicators rose 0.5% to 93.9 in December after being unchanged in November. Economists expected a December increase of 0.3%.

The Commerce Department said new home sales fell 7.3% in December to a seasonally adjusted annual rate of 369,000 units from November’s level, but the December reading was up 8.8% from December 2011.

Any batch of good economic news is always a welcome treat for investors, but there is more to the story. It cannot be overstated how important last week’s data points were in terms of reminding market participants that the U.S. economy is progressing because the week ahead is heavy on data reports as well.

Marquee reports next week include the final reading on fourth-quarter GDP and the January jobs number. Those two reports alone could really test the mettle of this rally.

The Bottom Line for Stocks

As we just noted, the week ahead will feature some major data reports, but there are still some pivotal earnings reports to come, including those from Caterpillar (NYSE: CAT) and Amazon (NASDAQ: AMZN) and some big energy names as well.

Speaking of the energy sector, following our advice and embracing micro-cap oil and gas names has proven profitable. We expect that trend to continue in the near-term.

This Nano-cap energy stock is sizzling

We brought this $27 million market cap name to your attention in our January 7th issue…and Black Ridge Oil & Gas Inc. (ANFC) has provided some very impressive trading opportunities.

ANFC closed at $0.49 on Friday, January 7 and has hit $0.65 on three different days since then…that’s a 32.7% gain. Usually you can’t catch the absolute top of trading opportunities, but Black Ridge has given you three chances to pocket some nice profits. With a pull-back to $0.57 at the close of the week, ANFC could be positioning itself for another nice run. Keep this one on your radar.

Our next favorite micro-cap sectors include health care and technology, and well have some names for you to follow in the coming weeks.

Research and Editorial Staff
MicroCap MarkePlace
Mike Casson, Executive Editor

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