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With a mostly favorable start to the new trading week, the bull camp seems to have picked up where it left off at the end of last week. Apparently seeing a formal bailout for Dubai added to the bullish resolve this morning. However, with the S&P still sitting below the old highs, a portion of the market is concerned that this market lacks the capacity to run up to a new even higher trading range ahead. However, with the US economic report slate empty today, that could allow the early bullish attitude to remain in place. It is possible that the US retail sales readings from last week will continue to lift the market in the absence of fresh economic data today. One has to wonder if the White House meeting with key US bankers will yield anything surprising, as the press is suggesting that the President is poised to press bankers on their lack of lending activity. While we concede to a slight upward bias today, the biggest risk to the bull camp might be the lack of bullish resolve and that could mean that prices could chop around after the initial thrust upward.
S&P 500: At least in the early going today, the March S&P would seem to have initial resistance at 1112.00. While the December 8th Commitment of Traders with Options report for S&P 500 Stock Index showed the Non-commercial position to be net short 21,988 contracts, with the Non-reportable position net long 95,928 contracts, that made the “combined” spec and fund position net long 73,940 contracts as of early last week. With the S&P to the overnight high, sitting as much as 28 points above the level where the COT positioning was measured, we suspect that the net spec long positioning is getting closer to the classic overbought level of 100,000 contracts. At least in the action this morning, we can’t rule out more new highs, but later in the week, into the FOMC statement release, we would suggest that longs should be picking a point to exit on the early rally this week.
DOW: With a fresh new high for the year forged in the early action today, the March Mini Dow would seem to be on track for an impressive trading session. However, as suggested already, we are skeptical that the market will be able to attract consistent buying interest and in turn rise significantly above the 10,500 level. While the December 8th Commitment of Traders with Options report for Dow Jones Index $5 showed the Non-commercial position to be net long 16,560 contracts, with the Non-reportable position net long 202 contracts, that made the “combined” spec and fund position net long only 16,762 contracts as of early last week. However, that positioning is clearly understated by the noted gains forged after the COT report was measured. To this morning’s highs, the Mini Dow had already forged a rally of 300 points from the level where the COT report was calculated. Critical support and a possible pivot point into the close today, is seen at 10,440.
NASDAQ: The March Nasdaq appears to be lagging behind the rest of the market in the early going today, as the Dow appeared to reach new 2009 highs in the overnight trade and the March Nasdaq wasn’t even able to rise above last week’s highs. Even more surprising, is the fact that the December 8th Commitment of Traders with Options report for Nasdaq Mini showed the Non-commercial position to be net short 7,085 contracts, with the Non-reportable position net long only 2,266 contracts, and that made the “combined” spec and fund position net short 4,819 contracts as of early last week. In other words, the Nasdaq as of early last week, was still “net spec” short and therefore it might have the most residual technical buying capacity in reserve. Critical support and a possible important pivot point into the close today, is seen at 1794.
TODAY’S MARKET IDEAS: The bulls look to control early this week, with the biggest threat to the bull camp coming from lackluster investment interest.
