Wednesday, November 11, 2009

Quiet Trading Day Yields New Highs on S&P, Dow

Yesterday, as reported below, the marketeers sought confirmation for the new closing highs on the Dow Jones Industrials, and today, confirmation is exactly what was provided by the S&P 500, which finished just a fraction above the old closing high of 1097.91, at 1098.50, sufficient to keep rally hopes alive for the near term.

While confirmation by the S&P won't satisfy the purist sensibilities of the Dow Theorists in the crowd, it's a good enough finish on a very slow trading day to keep confidence in the ranks of traders, investors and speculators. Oddly enough, the brain trust at CNBC completely missed the data, not even reporting it, focusing instead on earnings from Applied Materials (AMAT) - which were outlandishly good, by the way - and the aquisition of 3Com (COMS) by tech giant Hewlett Packard (HPQ).

To the technicians among us, AMAT's earnings and the HP news don't even come close to the importance of index confirmation, and it's a testament to the shoddiness of reportage by the financial media. (Last night, I tried to watch Fox's Financial Network and was as revolted by that as I was by their political coverage. Just what does Ann Coulter know about economics? She was one of the panelists on one of their shows. I won't be tuning into that pile of garbage again soon, as I much prefer the wit and wisdom of Bloomberg's Bernie Lo (pictured at right), host of Asia Confidential, for my late-night viewing.)

Getting back to Dow Theory, we anxiously await confirmation of the new highs - and the next leg of this delicious rally - by the Dow Jones Transportation Index (^DJT), which almost turned the trick on Veteran's Day, closing at 3988.00, a mere 57 points away from the magic number. If the Transports repeat today's performance, we'll have double confirmation in hand heading into Friday's trading.

Once again, the paucity of news and/or corporate earnings reports left traders to their own wits, largely battling the ravages of a runaway dollar index, which nearly scuttled the entire affair. One should not be too concerned with a rising dollar longer term, however much the government sock puppets like Tim Geithner tout a strong dollar policy. Our intrepid Treasury Secretary, doing front work for the President, said, "I believe deeply that it's very important to the United States, to the economic health of the United States, that we maintain a strong dollar," yesterday when meeting with Japanese officials in Tokyo. If you listen closely, you can actually hear the polite snickering by the Japanese finance ministers.

Dow 10,291.26, +44.29 (0.43%)
NASDAQ 2,166.90, +15.82 (0.74%)
S&P 500 1,098.51, +5.50 (0.50%)
NYSE Composite 7,155.36, +28.94 (0.41%)

Advancing issues beat decliners, 3654-2181, and new highs maintained their distinct advantage over new lows, 405-75. Volume was once again pathetic, the lowest of the month so far, due partially to the holiday and partially to lack of interest from money managers who have already locked in gains of 30-40% or more for the year. Low volume has been a signature of this rally for the entire duration, so it should be no surprise that markets continue higher for the rest of the year without intense participation. It just makes it easier for those who were late to the party to catch up with the real front-runners.

NYSE Volume 4,509,091,000
NASDAQ Volume 1,873,781,875

Commodities were discounting the unusual rise in the dollar, though hardly. Oil paid the most attention, gaining just 23 cents to finish in NY at $79.28. Gold ramped higher, up $12.00 to a new record high of $1,114.50. Silver finally got some attention, adding 32 cents, to $17.55.

The final word on this newest leg of the rally is that it may be a quick and powerful one, taking the Dow up to possibly the 10,800 level before the year is out. Gone is all the bearish talk of a 10-15% correction, the market just having completed its 5th 5% pull-back a little more than a week ago. All indications point toward higher finishes until Thanksgiving.

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