Holiday approaches..

At this point, we really have to forget about the hourly fluctuation of this tape and look a bit beyond twas‘ the trading days before Xmas.    Actually, make it a couple of weeks!    It is funny that on some days, you'd hear nothing but good news and on a day like today, you hear nothing but bad news.    Downgrade of Greece, big strength of USD, downgrade of GS/MS,  Citi's low secondary pricing and that slightly disappointing jobless claim, earnings diappointments all contributing to today's decline.    See, it's almost too easy to recap a day's action because all people needed is the "obvious" reason(s) to explain the daily fluctuation.   Again, recall every time if there is not ONE fundamental reason for sell-off, but many like today, the market rebounds very soon.    We also tested 1097-1099  gap noted yesterday as a possibility and it looks like it held.   Well, it's true that bulls want to see this tape higher while the bears want to see the tape lower.     Over the past few weeks, we've had enough drama from both camps claiming the direction on the next move.    So far, no one seems to have an edge.

The fact is, how this year finishes is kind of irrelevant at this point.    Even if we finish right at where it closed today by end of 2009, bulls will claim a victory.     It's just unthinkable that we will move substantially in either direction from where we are today.   In other words, we are pretty locked in a "high close" of SPX for the year.    It doesn't mean that we'd make new highs anytime soon, it simply means that the market will stay relatively close to its recent trading range.    Maybe we at DJIM have been asking for too much, if anything, we really need to have a peaceful Christmas trading season this year.    This is what we think many of the institutions/ traders are doing and as everything else this year according to the ’almanac’ of trading, a xmas rally is probably not going to happen as nothing else has gone the way of tradition.   Institutions/managers are holding enough exposure till the end of year and are positioned for 2010.    In all likelihood, the very next big move will be up.     Why?    We think the biggest piece of puzzle that's falling into the jigsaw is the banks.   When all the fuzz of secondary issues are over,  it definitely puts an ease into people's mind that we don't have to deal with it very soon.    The focus can put squarely back onto earning.  At this point, since many financial stocks have been off quite bit from the recent high, they actually have nothing to very little to lose but everything to gain.    This is why we think Ms. Whitney's negative call on GS/MS may just be a tad late this time.

Speaking of earnings, do people still care about RIMM  or ORCL  earnings AMC these days?    It may be too early to tell, but we think when people do come back from the holiday, the focus will quickly move back to the corporate earnings.   By the way, both RIMM and ORCL came out with solid reports/guidance.   With SPX rebalancing tomorrow, along with option expiration, it might be interesting to see how some rebalance their own portfolio on the last day before the Christmas week.