At the closing on Friday, we had the biggest five day winning session since 1932. Sounds great, if we were not at such beaten down levels. We are still YTD down DJIA -33%,SPX- 39%, NASD -43% going into the last month of 2008. Had this run occurred in any other year and had it taken a few months to accomplish, we are sure many of us would have doubled our portfolio value or more. Unfortunately, this is one of the most uncomfortable run-ups on low volume, we have encountered in a long while.
The question remains, are we going to repeat what happened in the early November? Now that the holiday is over and many traders are back to face a new flurry of economic reports, where are we going to go from here? The "GM Thing" is definitely going to take center stage during the next short while. Does it feel we have reached the bottom a week ago? Maybe , we're in the midst of a bottoming process, but it useless to try to call a bottom as we've said previously.
Right now, we are looking at an extended market that desperately needs a pullback. However, we have to be careful of what we wish for as a pullback can turn into a nasty collapse like in early November. What we keep our eyes on is the health of financial stocks. As long as they don't break lower than the lows of a week ago, we are pretty confident that this market will not test the recent low. Can December be the month that we finally see some stabilization in this market and get some tradable opportunities? We will have the answer soon enough. For now, we just pray that this market doesn't get too carried away with the recent run-up.
As far as individual stocks, the recent plays remain and are quite safe in an economic slowdown going forward, especially the first 3 below, we are also adding Friday's mention here of COGT to our watchlist, but will look for a sufficient pullback first to possibly enter a trade into....
...before Wednesday trade......"EBS, closed with a NCH and again showed it's one to buy on the dips. AXYS, one we noted moves quick points in any rally has not disappointed climbing over 10 points during rally. ASEI, has also notched a NCH. FLR, came all the way back near its post eps gap level. As you can see, some of the plays remain trades on dips. On the other side, MYGN may be looking like a quick short now".
Lots of economic data releases this week. Last week the market shrugged off anything bad, we'll see what happens this week as the whales come back.
1-Dec 10:00 ISM mfg (Nov, Index) 37.0 38.9 (street, Prior)
10:00 Construction Spending (Oct, %m/m) -1 -0.3
2-Dec Total vehicles sales (Nov, 10.5 10.6
3-Dec 8:15 ADP umeployment (Nov) --198 -157
8:30 Productivity & costs revised (3Q, q/q,sa) 0.9 1.1
10:00 ISM non mfg (Nov, Index) 42.0 44.4
4-Dec 8:30 Initial jobless claims (Nov 29, 000s) 540 540 529
10:00 Factory orders (Oct, %m/m) -4.3 -2.5
5-Dec 8:30 Unemployment rate (Nov,%) 6.8 6.5
8:30 Consumer Credit (Oct, $bn) - 1.8 6.9