Weary Santa Rally Stumbles; Stocks End Six-Day Streak

Just a day after vaulting to new multi-month and 52-week highs, the major averages took a breather with just two days remaining to trade in 2009. In what has been a banner year for stocks - at least over the final three quarters - there's little doubt that stocks are in need of a little sideways trade, likely until the beginning of earnings releases which begin in about two weeks.

Just like old St. Nick must be tuckered out after a long journey, so too with stocks in general. Many equities are at or near their highs and investors are taking a wait-and-see attitude. Life for traders and investors should return to a more normal environment once the calendar flips.

There was a little bit of economic news on this very sluggish holiday week, though the data was hardly significant. The S&P/Case-Shiller Home Price Index [PDF] for October showed home prices increasing for the seventh straight month, though the rate of improvement was slowing slightly and not all areas of the country experienced gains. David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s, described the report as "flat."

The Conference Board's Consumer Confidence Index jumped from 50.6 to 52.9, with the rise attributed to improving perceptions of the labor market. The number is still far below the benchmark of 90, considered to depict a "strong" economy.

Markets mostly shrugged off any data, and, with Wall Street sparsely populated once again, much of the activity was confined to squaring up or adding to positions before the year's end. Day traders were active, though overall volume was dismal for the second straight session. Overall volume was lower than Monday's, a sure sign that the incipient rally has run out of steam for the year, but could resume once volume returns to more reasonable levels.

Dow 10,545.41, -1.67 (0.02%)
NASDAQ 2,288.40, -2.68 (0.12%)
S&P 500 1,126.19, -1.59 (0.14%)
NYSE Composite 7,252.19, -9.05 (0.12%)

Decliners outperformed advancing issues for the second straight session, though by the narrowest of margins, 3220-3210. Both new highs (412) and new lows (59) returned lower numbers than on Monday.

NYSE Volume 2,808,519,250
NASDAQ Volume 1,191,436,875

The dollar was stronger against foreign currencies, with the Dollar Index trading in a range right around a key support/resistance area just below 78. The greenback is well off the lows of two months ago, which were in the low 74 range.

Oil managed a gain of just 10 cents, to $78.87. Gold, which generally trades in the opposite direction of the dollar, did so, losing $9.80, to $1,098.10. Silver also fell, down 46 cents, to $17.10.

With just two trading days left in 2009, it would neither be surprising nor upsetting if stocks took a slight haircut into the end of the year of about 1-1.5%. In fact, such a move on low volume might actually be a sign of health, signifying that investors remain cautious, though optimistic about prospects for 2010.

Holiday Rally Continues

In the absence of any significant news, traders took up and added to their positions in the midst of a year-end rally that now has stretched to six straight days of gains.

Once again, stocks traded in narrow ranges, led by large-caps, telecom and health care, especially Dow components AT&T (T) and Verizon (VZ). Gains were small and not broad-based, with financial stocks suffering late in the day.

Dow 10,547.08, +26.98 (0.26%)
NASDAQ 2,291.08, +5.39 (0.24%)
S&P 500 1,127.78, +1.30 (0.12%)
NYSE Composite 7,261.24, +6.24 (0.09%)

Declining issues pushed ahead of advancers, 3276-3228, though the number of new highs shot up to 733, against 93 new 52-week lows. Volume was nearly non-existent, as both the NYSE and NASDAQ recorded one of the slowest trading sessions of the year. Expect the low volume mantra to remain in place for the duration of the holiday-shortened week as many trading desks are closed for the holidays. Traders, investors, even hard-nosed day-traders apparently are finding other things to do with their time.

NYSE Volume 3,144,974,250
NASDAQ Volume 1,249,068,375

After falling for the better part of two weeks, oil has managed to gain back to $79.00, up 95 cents on the day, its highest closing level in two weeks. Gold also has regained its previously-lost footing, adding $3.00 to $1,107.80. Silver also gained, up 12 cents, to $17.56.

With so little activity, there simply isn't much to do this final week of 2009 except sit back and wait. Traders and volume should return after the first of the year. In the meantime, the economic schedule of releases is very light. The next major move in the markets should coincide with earnings reports, beginning the second week of the new year.

It's a good time to research, reflect and refocus.

St. Nick Drops in on Wall Street

As expected, the jolly old Santa Claus Rally began today with modest gains in a shortened session. Stocks posted gains right from the opening bell, with little inducement to sell shares.

Dow 10,520.10, +53.66 (0.51%)
Nasdaq 2,285.69, +16.05 (0.71%)
S&P 500 1,126.48, +5.89 (0.53%)
NYSE Composite 7,255.00, +37.80 (0.52%)

Advancers beat decliners, 4288-1962. There were 663 new highs and just 66 new lows. Volume was extremely thin.

NYSE Volume 1,413,204,625
Nasdaq Volume 631,728,687

Oil gained 43 cents, closing at $77.10. Gold was up $10.80, to $1,104.80. Silver finished 25 cents higher, at $17.44.

Everybody left happy.

Merry Christmas

Santa's Coming; Equities Continue to Rally

There was a little less enthusiasm for stocks after the University of Michigan announced that consumer sentiment fell in December, to a reading of 72.5 from November's 73.4, and National Association of Realtors (NAR) reported that new home sales fell by 11.3% in November, to a seasonally-adjusted annual rate of 355,000 units. The drop from the same period a year ago was 9%, due to uncertainty over the new home buyer tax credit, which was extended by congress, but not in time to cause a slowdown as many buyers walked away from possible deals. Also adding to homebuilders' woes are the crush of foreclosure properties on the market, which are driving down real estate prices overall and provide a tempting alternative to purchasing a new home for tens of thousands of dollars more.

Builders have not recovered from the housing meltdown of the past three years running, with the number of new homes on the market down to levels not seen since 1971.

Those two bits of economic reality - released at 9:55 and 10:00 am, respectively - sent stocks backwards. The Dow went from its high of the day just moments after the open, to the low of the day shortly before 10:30 am, and traded in a narrow, 35 point range the remainder of the session.

All of the major indices recorded smallish gains, with the NASDAQ leading again and making new multi-month highs, as did the S&P 500.

Dow 10,466.44 1.51 (0.01%)
NASDAQ 2,269.64 16.97 (0.75%)
S&P 500 1,120.59 2.57 (0.23%)
NYSE Compos 7,217.20 33.02 (0.46%)

Trading was extremely light and listless, without much enthusiasm except on the NASDAQ, which continues to spark rallys. Advancing issues outpaced decliners handily, 4580-1913, and there were 679 new highs as compared to just 81 new lows, though you wouldn't expect those kinds of numbers given the tiny gains on the day. There's quite a bit of nibbling going on, mostly from day-traders and high-frequency types, but the market continues to grind forward on the expectation of a Santa Claus rally, usually defined as the final five trading days of the year, plus the first two of the following. That would put markets right on the cusp of one final push into the new year, despite stocks trading at elevated levels.

NYSE Volume 3,585,565,750
NASDAQ Volume 1,606,121,000

The dollar weakened today, taking a break from its month-long rise against the other currencies of the world, and, right on cue, commodities rallied. Oil, which was also boosted by a significant draw-down in US oil stock, rallied $2.27, to $76.67. Gold gained $7.80, to $1,094.50, temporarily breaking off its very own deep, recent slide. Silver added 15 cents to close at $17.18 per ounce.

Markets will be open only a half day on Thursday and closed Friday in observance of the holiday.

I'll be reporting sometime after 1:00 pm on the short session, wishing all a very Merry Christmas. It's been a remarkable year and my pleasure to report on it.

Leveraging the Mobile Internet and Social Media

Leveraging the power of the mobile smart phone market, the internet and social media are key elements of a number of emerging new businesses, some of which could evolve into the "next big thing."

One such company is Digital Development Partners, Inc., a mid-tier start-up company (already listed on the OTCBB under ticker symbol DGDM) with a flagship platform under development which promises to leverage the mobile internet and social media with online couponing for merchants of all sizes.

Already under development is their flagship YuDeal.com platform, set for pilot launch in Q2 2010. The company plans to launch the pilot in Asheville, NC and quickly roll out in cities nationwide. YuDeal integrates social networking, real time consumer discounts and advertiser analytics to help advertisers identify and quantify a "Real Time" advertising campaign.

While details are as still sketchy, it would appear that Yudeal.com will offer small to medium-sized merchants competitive pricing to market on the platform, which will probably appear as an iPhone App (and also be compatible with other smart phones) for consumers, accessible from either a mobile phone or by computer.

The company's stated goal is to completely change the way advertisers use coupons in much the same way Google changed advertising on the internet with their branded AdWords and AdSense text-ad platform.

DGDM began trading in November and is currently priced around $1 per share.

Digital Development Partners, Inc. (OTCBB: DGDM)