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The stock market is showing signs of forging some gains today and since it is the day before Thanksgiving, one has to anticipate some type of pre-holiday rally effort. While the stock market could have been undermined in the wake of the slack US economic numbers released already this week, it seems as if the equity trade is content to embrace the idea that interest rates are going to remain low until real sustainable growth is seen. Some players even think that the Fed is destined to overstay its welcome and that sustained low rates in the face of early inflationary signals, will eventually lead to a bout of real inflation. As in the last recession, the stock market seems to be capable of rising off slack numbers, as slack numbers are seen as a confirmation that low rates are going to stay in place even longer. In addition to the discounting of obviously disappointing scheduled economic data flows, the stock market has also discounted some unfavorable developments for GM, which has seen several asset sales efforts derailed. In fact, the stock market also discounted potentially undermining news from the FDIC in the prior trading session and that highlights a market with bullish blinders on. Even though the trade could see some discouraging data again this morning, we have to leave the bull camp with the near term edge.
S&P 500: The December S&P comes into the action today sitting in the middle of a rather wide uptrend channel on the charts and that could allow the bull camp a measure of control early in the trade today. While the December S&P could encounter some initial resistance at 1109.30, we would not be surprised to see another new high for the year at some point during the trade today. In fact, as mentioned before, it would not be surprising to see the stock market carve out some further gains despite a series of disappointing scheduled US data points in the early morning trade. We see a casual rise in the S&P today, unless the initial or ongoing claims readings post a noted headline type decline and then the stock market might see its upward momentum expand. Critical support in the December S&P is seen at 1106.10.
DOW: While the December Mini Dow hasn’t managed to forge a fresh new high for the move in the overnight trade, prices remain within close proximity to the recent highs and seemingly within a mostly bullish posture. Perhaps the market was cheered by the Fed’s upwardly revised growth forecasts or perhaps the market is simply being emboldened by the idea that the Fed is content to leave ultra low interest rates in place for as long as necessary. Therefore, the bear camp seems to be fighting an uphill battle and that in turn would seem to leave the next upside target in the December Mini Dow up at 10,515, which is also the top of the April through November up trend channel.
NASDAQ: The Nasdaq remains well below its recent highs and it is obviously lagging behind the rest of the market. Initial resistance is seen at the 1800 level on the charts and it could take a series of bullish surprises from the scheduled data to give the Nasdaq a distinct lift. However, the Nasdaq could be dragged higher on the charts, in the event that the whole market is lifted by a pre-holiday type rally. The bulls look to have a slight edge as long as the December Nasdaq manages to hold above critical support of 1786.
TODAY’S MARKET IDEAS: Expect the bulls to grind out more gains today.
