Daily market commentary for Wednesday, Dec 6, 2006

Written By: Teresa Appleton Stock Forum ID: Teresa

Tuesday left a narrow ranged green day across the broader markets.  Volume did pick up slightly today on the NYSE and Nasdaq over yesterdays anemic volume to leave an accumulation day.  However it is still well under pacing last weeks volume and participation we saw.  Market breadth also strong for the bulls day.  ISM serviced better than expected helped propel us forward, which was a surprise after last weeks ISM manufacturing was a disappointment.  So I guess all those haircuts, massages, and other luxury items all you traders get is keeping the economy strong. 

 
Alright that is tongue in cheek but in the big picture can services really sustain a growing economy?  Growth in manufacturing and employment are more important in my mind.  Tuesday’s pause showed the markets are nervous ahead of Friday’s data.  There are some reasons to prop the market up or keep it in range until the end of December that we have to keep in mind.  The “traditional” Santa Claus rally that we are starting to hear talks of, usually pushes the market from mid month into January to the upside.   Also there are tax reasons to not overlook.  The markets performance this year has created gains for many investors, fund managers and hedges, they would prefer to not sell in December to lock those gains.  Any capital gains in 2006 would have to be reflected on taxes by April 2007.  IF they hold into January that pushes the tax liability into April 2008. 

 
Crude closed  down one cent on the day to close at $62.43.  Oil did trade up to $63.20 mid morning to fall quickly off that level.  Gold also dropped $2.90 to close at $642.30.

 
Going into Wednesday we are still awaiting a pullback, Tuesday’s narrow range and lack of upside momentum still has me watching for downside.  I don’t think the uptrend is ending, we just need a pullback in this run up.  Monday’s light volume rise and Tuesdays consolidation action leaves me to think the market is jittery ahead of Friday’s data and is waiting on a reason to pullback.  However, if we don’t find the bulls momentum and do more than crawl up we’ll fall under our own weight.  So a pullback is healthy and would be orderly instead of seeing panic set in the market.  Plus complete consolidation is not only dull but won’t bring in new money.  Smart money waits on pullbacks, so we look for that into Wednesday. 

 
Economic Data for the Week of December 4-8:  Wednesday 10:30 Crude Inventories, Thursday 08:30 Initial Claims, 03:00 Consumer Credit, Friday 08:30 Nonfarm Payrolls, 08:30 Unemployment Rate, 08:30            Hourly Earnings, 08:30 Average Workweek, 10:00 Mich Sentiment Prel.
 

Some earnings for the week of December 4-8:  Wednesday pre market BTH and after the bell ABM, DDMX, NCS, SEAC, UTI, VTS.  Thursday pre market AHCI, CRMT, CIEN, FILE, JOSB, MOV, TOPT, TTC, and after the bell ATW, CENT, CMOX, ESL, NSM, SHFL, PAY.  Friday pre market BKRS.

 

ES (S&P 500 e-mini) Wednesday’s  pivot is 1415.00, weekly pivot is 1396.    Intra day  Support:  1414.25, 1412.50, 1411.25 and 1409.  Resistance:  1419, 1420.75, 1422, 1425.  60 minute chart is below.

ER(Russell 2000 e-mini) Wednesday’s pivot is 799, weekly pivot is 782.10.  Intra day Support:  797.30, 796.4, 795.70, 794.50 and 792.4.  Resistance:  799.60, 800.30, 801.40 and 802.70. 60 minute chart is below.