Major US Indices

With the data anything but positive, you would have expected a decline... but as I said yesterday, the pullback from last week's high has finished and now it's time for the ramp into the year end.

The bad jobless claims numbers spooked the market, and equities weren't overjoyed with the Wholesale Trade report at 10 a.m. Prior to the market, two semiconductor stocks (Altera and Xilinx) had warned on revenue and earnings, as well. The ducks appeared to be lined up for a decline. ALTR was taken to the woodshed good and proper, dropping 7.7% for the session; XLNX got away with six of the best, getting only a 3.29% haircut by the close of play. At their respective lows, ALTR was -12.5% and XLNX was -9.2%. Yowza!

The weight of data (and warnings) was what prevented the normal "Fed jamjob" from the repo market from getting any traction until almost half an hour later after its appointed time, but eventually the weight of money (thanks, Easy Al) won the day.

The DJIA posted a rise of 58.59 points (0.56%), closing out the day at 10552.82 points; the broader S&P500 rose 6.43 points (0.54%), to end the session at 1189.24.

Over at Times Square, the Nasdaq Composite advanced 2.9 points (0.14%), to close at 2129.01, while larger-cap technology issues fared better with the Nasdaq100 adding 7.88 points (0.49%), to end at 1609.79 points.

NYSE Volume was chunky, with 1.62 billion shares changing hands, while Nasdaq Volume was super-chunky (over 2 bill) yet again, with 2.28 billion shares thrashing their way through cyberspace.

Index	Close	Gain(Loss)	%
DJIA	10552.82	58.59	0.56%
S&P500	1189.24	6.43	0.54%
Nasdaq Composite	2129.01	2.9	0.14%
Nasdaq100	1609.79	7.88	0.49%
NYSE Volume	1.62bn	-	-
Nasdaq Volume	2.28bn	-	-

Bellwethers

My 9-stock "bellwethers" group rose by an average of 0.14%

• Citigroup (C) +$0.15 (0.32%) to $46.44;
• Fannie Mae (FNM) -$0.07 (0.1%) to $69.82;
• Intl Bus Machine (IBM) +$0.86 (0.89%) to $97.51;
• General Electric Co (GE) +$0.31 (0.87%) to $36.02;
• Freddie Mac (FRE) +$0.34 (0.5%) to $68.67;
• Ebay Inc (EBAY) +$1.61 (1.4%) to $116.22;
• Wal-Mart Stores (WMT) +$0.26 (0.5%) to $52.77;
• Intel Corp (INTC) -$0.25 (1.09%) to $22.76;
• Cisco Systems (CSCO) -$0.40 (2.02%) to $19.40;

Market Breadth & Internals

On the NYSE advancing Issues exceeded decliners by 1778 to 1524 for a single-day A/D reading of 254; and Nasdaq losers exceeded gainers by 1726 to 1383. That's a very balanced breadth setup, in light of the 145-point moonshot that the Dow had during the day (from its low).

NYSE advancing volume exceeded volume in decliners by 945.51 to 656.43 million shares; Nasdaq advancing volume was greater than volume in decliners by 605.97 to 604.69 million shares.

90 NYSE-listed stocks rose to new 52-week highs, and 7 posted fresh 52-week lows, while on the Nasdaq there were 62 stocks that hit new 52-week highs, and 19 which fell to fresh 52-week lows

	NYSE	Nasdaq
Advancers	1778	1383
Decliners	1524	1726
Advancing Volume (m)	945.51	605.97
Declining Volume (m)	656.43	604.69
New Highs	90	62
New Lows	7	19

Market Sentiment

The sentiment setup shows a market that is still in the grip of a wave of mindless optimism - which means we are in a topping formation. There are also a couple of interesting divergences which have shown up on the Dow Transports chart (where price made new highs but momentum has faded sharply), and of course the Industrials have not "confirmed" the Transports' move to new yearly highs.

All of this, plus the inordinate tilts in the NYSE and Nasdaq bullish percent indicators (shown below) set us up for a very exploitable new year... but between now and then I still expect that the market will meet the target of 1220 posted here just after the S&P500 futures closed above 1140.

Equity Put-Call Ratio... not too extreme now

NYSE BPI - too bullish

Nasdaq BPI - WAY too bullish

Bond Market Analysis

Bonds fell at the long end, with the yield on the benchmark 30-year Treasury bond rising 5.5 basis points to 4.836%. The December 30-year T-bond futures (ZB04Z) we've watched since my short call at 114 & 1/32 way back, fell 16/32 to put the position back in the black. Those of you who're interested in how this position would have been aggressively managed should have a look at my favourite charts - a 5-period smoothed 14-day %R and a standard RoC... you will see that once the call is made (by me) those indicators are a terrific guide to when to take profits and try to reset the trade on better terms.

There is also a monster head & shoulders in the 30-year bond; the market has broken the neckline, but recent awful economic data has saved it thus far. The target (shown below on the chart) it will seek is about 106 - well on the way to my target for the new year, of 102 and then 100.

US 30-year Bond Futures

Index	Close	Gain(Loss)	%
UST 2Y (yld)	2.916	-0.01	-0.27%
UST 5Y (yld)	3.545	-0.035	-0.98%
UST 10Y (yld)	4.172	-0.05	-1.18%
UST 30Y (yld)	4.836	-0.054	-1.1%

The Banks Index rose 0.39 points (0.39%), ending the day at 101.5; within the index,

• MBNA Corp (KRB) +$0.48 (1.85%) to $26.45;
• Golden West Financial (GDW) +$1.64 (1.38%) to $120.87;
• National City (NCC) +$0.44 (1.22%) to $36.62;
• Fifth Third Bancorp (FITB) +$0.54 (1.18%) to $46.32;
• Suntrust Bank (STI) +$0.64 (0.89%) to $72.16;

The Broker-dealer Index gained 0.55 points (0.37%), to end the session at 148.46; the ticket clippers lined up as follows -

• Bear Stearns (BSC) +$3.40 (3.3%) to $106.55;
• Charles Schwab (SCH) +$0.21 (1.95%) to $10.98;
• Merrill Lynch (MER) +$0.81 (1.41%) to $58.37;
• Raymond James (RJF) +$0.26 (0.87%) to $30.19;

The Philadelphia SOX (Semiconductor) index shed 6.45 points (1.49%), to 425.46

• National Semiconductor (NSM) +$0.79 (4.94%) to $16.79;
• Maxim Integrated (MXIM) +$0.35 (0.84%) to $42.24;
• Marvell Tech (MRVL) -$0.12 (0.35%) to $33.87;
• Micron Tech (MU) -$0.05 (0.45%) to $11.15;
• Applied Materials (AMAT) -$0.12 (0.69%) to $17.15;

Gold & Silver Markets

Gold weakened by another $2.90 (0.66%) to $437.10 per ounce. The Gold Bugs Index lost 0.25 points (0.12%), to 214.85 points. Within the index, the major movers were as follows:

• Freeport-McMoran (FCX) +$0.75 (2.08%) to $36.74;
• Kinross Gold (KGC) +$0.12 (1.66%) to $7.35;
• Glamis Gold (GLG) +$0.26 (1.4%) to $18.81;
• Golden Star (GSS) +$0.05 (1.39%) to $3.65;
• Eldorado Gold (EGO) +$0.02 (0.67%) to $3.00;

Silver was absolutely tennelled by another $0.37 (5.16%) to close at $6.81 per ounce. The Gold and Silver Index (XAU) gained 0.44 points (0.45%), to 99.24 points.

• Freeport-McMoran (FCX) +$0.75 (2.08%) to $36.74;
• Barrick Gold (ABX) +$0.42 (1.82%) to $23.51;
• Kinross Gold (KGC) +$0.12 (1.66%) to $7.35;
• Placer Dome Inc (PDG) +$0.25 (1.33%) to $19.08;

Index	Close	Gain(Loss)	%
Gold	437.1	-2.9	-0.66%
Silver	6.805	-0.37	-5.16%
PHLX Gold and Silver Index	99.24	-1.01	-1.01%
AMEX Gold BUGS Index	214.85	-3.77	-1.72%

Oil Market

Oil was firmer, rising by $0.44 per barrel, closing at $42.64 per barrel. The Oil and Gas Index (XOI) gained 2.82 points (0.4%), to 710.95

• Occidental Petroleum (OXY) +$0.62 (1.13%) to $55.37;
• Kerr Mcgee (KMG) +$0.60 (1.04%) to $58.37;
• Repsol (REP) +$0.20 (0.83%) to $24.43;

The Oil service stocks (OSX) Index advanced 2.21 points (1.88%), to 119.7

• Noble Corp (NE) +$1.63 (3.61%) to $46.77;
• Cooper Cameron (CAM) +$1.47 (2.97%) to $51.03;
• Halliburton Co (HAL) +$1.03 (2.69%) to $39.38;

Index	Close	Gain(Loss)	%
Reuters CRB	277.1	0.55	0.2%
Crude Oil Light Sweet	42.64	0.44	1.04%
AMEX Oil Index	710.95	5.61	0.8%
Oil Service Index	119.7	2.42	2.06%

Cheers,