We’re still trying to get bullish, really we are…
Yes we are reluctantly bullish and only technically bullish at that. All we are asking of the markets is for them to take out our very simple levels and hold them for more than a day or two. Those levels are (and have been since early September): Dow 10,087, S&P 1,096, Nasdaq 2,173, NYSE 7,204 and Russell 623. These are, according to the 5% rule, the levels we need to hold in order to establish a floor in the markets that justifies setting higher upside targets. If they cannot be crossed, then these REMAIN our upside range targets and we need to start seriously considering the possiblility that we may still get a pullback to Dow 9,650, S&P 1,020, Nas 2,075, NYSE 6,900 and Russell 575.
As I mentioned last week (and noted on David Fry’s IWM chart), the Russell was the first to fail our 623 mark and will be our canary in the coal mine as they test 595, which is the 50 dma. A failure there and the markets have little support all the way down to our June highs, our original breakout levels of Dow 8,650 and other levels you don’t even want to think about on a Monday.
$2.66 is another level we don’t want to think about. That’s the average price of regular gasoline this weekend. Despite 10% lower demand than last year when December gasoline averaged $1.66 a gallon. What’s a dollar a gallon between friends right?
Well, actually since US consumers use 63M barrels of gas each week, and a barrel happens to be 42 gallons, it happens to be about $10.5Bn a month taken our of consumer’s pockets. That’s cash, after-tax money – gone! Remember how much that $160Bn stimulus helped the economy last year? How much do you think a $120Bn mugging hurts the economy this year?
The timing couldn’t be worse – last year, gas prices flew down and helped people make it to the mall for Christmas, this year already – as we can see from Amazon’s great quarter, many people will be skipping the malls and buying on-line. With 10% of the workforce unable to find jobs and 10.3% of the US retail space now vacant (up from 8.4% last fall) it’s kind of hard to get into the Christmas spirit, let alone the mood for a Santa Clause rally, which is what the bulls are hoping for now that there…
