Planet Wealth

Ordinarily, following a big upday only giving back 1 point on the S&P would be exactly what you want, especially when the close held above 1100.  The S&P futures however closed with a perfect doji (open and close within $.25 of each other, which signals indecision in the market and quite often a change of direction or breakout) which is one of the reasons no new trades were added today as talked about last night.

The market opened basically flat following a plethora of economic news that came out on Tuesday.  Let's try and focus on what was important and in plain english.  The Confidence Board released the November reading of Consumer Confidence which rose to 49.5 from the 48.7 reading in October.  For comparative purposes, a reading above 90 usually indicates a strong economy.  The most likely culprit for the lower reading is the high unemployment rate.  It's hard to have confidence in the economy when you don't have a job.  It's important to remember though that the employment rate is the last thing to fall in line coming out of a recession.  Companies are nervous and will wait until they are positive that things are improving before they begin to hire.  Employment therefore is a lagging indicator.  None the less, the market continued lower following the release of that report.  Just the opposite of yesterday, the market then began to slowly climb back up towards breakeven for the day.  It was a battle however to see if the market would hold that 1100 level.   During a lower volume holiday week, you can sometimes get exaggerated moves and the big drop following that report may have been just that.     The governament actually dialed back its calculation for third quarter GDP to a 2.8 percent rise rather than the previous estimate of 3.5 percent, which certainly didn't help in early trade.  

The recovery in the market during the day was aided by the release of the Federal Reserve minutes from their last meeting.  The Fed promised to keep interest rates low as they saw no discernable inflation.....at least not yet.  The Fed did raise its forecast for economic growth in the second half of the year, but said that unemployment would likely stay high.  The market seemed to focus more on the Fed minutes than the governmental economic data and the slow climb continued until just before the close.  The high of the day was reached just before 3 pm when the market actually moved positive for the day.  The market then fell back a bit in the last 30 minutes closing slightly lower on the day.

All things considered, we held off new positions for one more day.  As mentioned last night, the market is right at major resistance and will soon break one way or the other.  Stay tuned!