Thursday, December 2, 2010

The logic of an 8.5 percent rally to 622.78 from these levels becomes visually persuasive when you sketch it on the hourly chart.  More immediately, however, a midpoint resistance looms at 573.89, a little more than 16 points above yesterday's high. That can serve as our minimum upside objective for the near term.  FYI, the minor rally begun from Monday's 530.01 low projects above it, to 574.29.

The futures remain on track for a blast to 30.465, a Hidden Pivot target flagged here earlier.  First, however, they'll need to tackle the multi-decade high at 29.405 recorded on November 9.  It lies just 53 cents above yesterday's peak -- a distance that shouldn't tax bulls too heavily if they're in a buying mood. As of around 11 p.m. ET, they were building a moderate, 15-degree slope that would not much worry the bad guys. However, with just a weak thrust to 28.765 --  seven cents above the night's so-far high -- buyers would be threatening a rout, since that would surpass a look-to-the-left external peak not far below the big one at 29.405.

Bulls gained tough yardage yesterday, poking above a November 12 peak at 1397.00 to refresh the bullish impulse on the hourly chart. The futures will need to hit 1411.80 today to keep the winning streak going, but unless they dive to 1331.00, the 1429.30 target given here earlier will remain our minimum upside objective for the near term.

We should like to see the futures push higher today and tomorrow if bulls are to remain in charge at least until New Year's. Although I gave permabears little to hope for in today's commentary, what I did not mention is that even though yesterday's rally reached a 1207.25 rally target with two ticks to spare, it manifestly lacked the guts to tack on the extra five ticks it would have taken to surpass the look-to-the-left peak labeled in the chart. This won't necessarily be fatal, but it does hint ever so slightly of cowardice on the part of buyers.  Let's see how things go for the rest of the week before we make any crucial judgments.

Say one thing for DaBoyz, they have infinite patience to wait until things turn their way, as things nearly always do. Stocks had been grinding sideways for nearly two months, but yesterday the prop-desk provocateurs instantly transformed the picture to their liking, goosing the broad averages into a powerful short squeeze that could keep the market buoyant for the remainder of the year. What was most impressive about this feat is that it leveraged some employment news that wouldn’t have elicited so much as a yawn in the good old days. Supposedly, the private sector added 93,000 non-farm jobs in November, up from 82,000 a month earlier. This is surely better news than we’ve grown accustomed to, but it is not good news per se, especially considering that jobs would have to grow at several times the current rate for nearly a decade to replace the estimated eight million positions lost to the Great Recession.  Based on anecdotal evidence, it’s hard to tell where the new jobs are coming from.  It surely is not from the professions, which, to hear it first-hand from friends who are lawyers, Realtors and stockbrokers, remain in the doldrums. Nor is it in the trades, although one Master Electrician we know has been working overtime on big commercial jobs in Denver for more than a year. In Boulder, where the economy has remained relatively strong, the biggest area of growth seems to be, no kidding, Mexican restaurants.  In nearly every instance where a moderate to expensive restaurant has closed and a new one taken its place, the replacement has been a tacqueria.  The only exception that springs to mind is a Ted’s Montana Grill that opened just off Boulder’s main pedestrian thoroughfare. The steak house, one of a chain of restaurants owned by Ted Turner,