Friends
As we have been saying, the market’s final direction each day is determined by the last piece of news or rumor. Today as we drifted aimlessly through the afternoon, we got news that the G-20 Nations are considering a $600 billion lending facility to the IMF. The Dow shot up 100 quick points within minutes, only to give more than half of it back in the last 3 minutes of trading when the story was denied by the IMF. Until then, traders had been content to wait for tomorrow’s ECB meeting and Friday’s European Union summit. The news that S&P threatened a downgrade on the European Union itself seemed to have little effect on stocks (S&P and their ratings are becoming irrelevant) as traders are squarely focused on the upcoming meetings. Finally, after an 80 point Dow drop this morning (following a 50 point up move yesterday) stocks rallied in the last hour to finish the day up 46 points. The S&P 500 was up 2 points to close at 1261. Gold was up $14 to close near $1745 per ounce. Oil was off slightly, trading near $100.80 late in the day.
On a technical basis, we need the S&P 500 to get through the 200 day moving average which is around 1266. Stocks will definitely break one way or the other over the next two days as the news cycle will be hot and heavy. If we can get through that 200 day resistance level, then Santa can saddle up the reindeer and we can get a nice finish to a year-end rally. Of course, we have no idea what kind of news will be coming out of Europe the next couple of days, hence trading has been very light as market participants chose to wait on the sidelines for clarity.
We’ll see what develops tomorrow and keep you informed.
Have a nice evening everyone.
