The Stocks took a powder through the afternoon after looking strong through the morning. With the market sitting at these nine month highs, it won’t take much for the bears to go on a hunting trip and try to set off a big correction as an early Christmas Present. Considering how much the Stock indexes have rallied from the July lows alone, the perma bears are bound to be correct one of these days. SPZ has rallied over 230 handles from its July lows at 865 to today’s high at 1,116.80
DJZ has rallied 2500 points from the July 8050 level to Wednesday’s high at 10505. 2500 points in 5 months. All the while, institutional investors have been mostly on the sidelines.
We could be shaping up for an exhaustion top one of these weeks, most likely after the New Year. If we hold up through tomorrow’s unemployment and through the rest of the month, until about the 15th, when basically every one leaves on vacation, we could be set up for an interesting first quarter of 2010. If money comes pouring into these equities, in effect, a collective, “its now safe to get back in the water…Jaws has left the building”… Unfortunately that could be the set-up for a major correction. Once everyone feels like its safe to plunge back on the long side…
Today’s action in the stocks had profit taking through the afternoon, across the board in the Metals, Crude Oil, most of the grain complex (except for SF). DJZ settled down 87 points at 10352, about 150 points off of of Wednesday’s high at 10505. DJZ posted a fresh 9 month high this morning at 1116.90 and then settled at 1098.00a 17 handled down move from the highs, and another bearish hook reversal.
Most of this is in anticipation of the Unemployment Number tomorrow. November’s 10.2 percent was the old number. With today’s “job summit” in the capital, my guess is the powers that be are being pre-emptive with their meeting today. No matter what happens tomorrow with the number, they have made a gesture that they are working on the problem. If its a good surprise, and the number drops, they win. If its the latter, then they can say, “well, see we are hard at work on your behalf.” On an interesting note President Obama acknowledged today that in reality, there is only so much the public sector can do, and the real engine for jobs is the private sector. A little different tune than when he was a candidate.
Anyhow, Tomorrow should be eventful for some action across the board in the stock indexes. Keep an eye on last Thursday evening’s lows as first support, if the bears really take a whack at these indexes. Basically its around 10,100 in the DJZ, and 1066 in SPZ.
Good Trading
