Encouraging...

It's pretty clear why the market reverse from the gap down and finished on an encouraging note.  Last week we were saying the market is 'shrugging' off bad news,  we expected this to change early this week as the whales came back.  They did and drove the market down nearly 10% in a single day.   But, as of today,  we can say the market is shrugging off bad news once again and this cannot be ignored at this time of the year.   Also, we can't ignore that the Financials are also making a quick recovery off a few bad days, following a nice run in the prior week.  This needs to stick to go forward!.

The morning had a slew of tech disappointments that led to the gap down.   What happened next was RIMM's negative preliminary 3Q results were being shrugged off as it reversed at the bell from a bad premkt.   Seemingly, the buy side had been quicker to discount the bad news than the sell side!.   Basically, the street was already very cautious.   RIMM’s fundamentals are still strong, and very few large cap tech names can claim growth of this magnitude.   As we watched this positive action, we felt it was important to post that CSCO/Chambers were having a conference starting at 10am as it could be a turning point for the market.   One glance back at the intraday charts and you can see CSCO was starting to move during the conference,  leading the market higher.   Chambers said that trends thus far in the Q are consistent with the assumptions management made when setting guidance November 5th,  signaling business is tracking to plan, albeit a weak plan.    This was enough to set the Semi's in the SOX off as the best performers in tech land.

So,  if we stick to the premise that the majority of days lately the market is discounting , shrugging off bad news and therefore is not being driven by negative headlines, including ADP and manufacturing  data in the morning, later the beige book notes in the afternoon.    So, we ask what is the market trading off??. 

Simple.. we flashed SPX support/ resistance levels before the open..."Some levels to watch...SPX 826, 800, 752 support; 848, 860 resistance on upside ."   Once 848 was broken,  860 was the next level to watch.  It was evident late in the day a battle was underway for this front and a break was very possible.  Finishing at 871, up 22 was well North and gives potential for an early good start tomorrow.    Treasuries, not only equities rallied into the close.   Also helping the mkt is the fact that the government is willing to come in and buy mortgage backed securities as well as bonds with longer duration which is forcing fixed income portfolio managers to purchase longer duration bonds.   Another big positive,  yet not finalized is the Treasury is considering a plan to halt the slide in home prices and UK gov't announced a plan whereby struggling homeowners can demand a 2 yr "mortgage holiday" backed by taxpayers.  These are the good headlines and market is reacting in a positive manner.

Weighing and not to be forgotten on the market is still the Auto Washington Aid unanswered questions.   We also have the retailers reporting November sales Wed night and Thurs morning (the releases could also include some color on Black Friday trends).   Jobs numbers for Nov due out this Friday, consensus on  right now is for a loss of 325K jobs..GS is saying 400K +as of today

In an almost perfect Santa Claus rally world,  we'll get these data figures 'shrugged off'!.   Do you believe in Santa Claus?