Monday, November 29, 2010

* Setting Euro Fears Aside The Market Rallies off the Lows of the Session

Stocks rebound as buyers step up and support the market

The market returned from a holiday shortened week greated by hefty selling as fears over deapening of the European debt crisis. Stocks hung around the lows after a steep sell off heading into the 10am hour. Even a positive Dallas Federal Reserve Manufacturing activity report could not hold off sellers from pushing the markets to their lows. Many leaders were holding up during the sell-off, a positive sign for the markets in general. Just before 2:30pm EST the markets found solid footing and pushed higher back to the day’s high and closing just off the highs of the day. Another positive move by the market bouncing off support and as market leaders continue to act positive the uptrend remains intact.

Market pundits have been pounding the table the market had reached a top. CNBC has been running articles on the market topping and we have seen the highs of the year. While this may be true, as no one person knows the future what we have in front of us says we will push higher. Market leaders remain positive and in control. Not too mention smalal caps are indicating strength and when small caps lead it signals traders are willing to take on risk rather than unload it. The moral of the story is to pay attention to the market leaders and their price/volume action.

In the early going the VIX jumped considerably as fears over a market collapse continued to put pressure on stock prices. By the end of the trading session the VIX index reversed its gains and closed lower indicating further decline in the index is instore. The VIX certainly indicated near capitulation type selling just without the volume. Panic selling over the European crisis is noteworthy, but the action at the end of the day is the most important indication of where the market wants to go.

This week is going to be a big week as far as economic reports. Tomorrow kicks off the week with the following reports: S&P Case Shiller, Chicago PMI, NAPM-Milwaukee report. The Fed’s beige book is out later in the week and CNBC’s favorite the Non-Farm Payroll report on Friday. There should be plenty of noise generated this week, but we’ll be focused on the market action and a laser focus on our leaders.

Tomorrow closes out the month and there will be talk about window-dressing in terms of the market action. We are looking for the market to build upon today’s move off the lows and push higher.

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