E-Mini S&P 500: Christmas Rally - Game On

Includes: AA, BA, BAC.PJ, C, CAT, GE, HAL, HPQ, JPM
by: DeWayne Reeves

The E-Mini S&P 500 is rising on fairly good economic numbers. Numbers for the two major components to keep the US on the road to recovery, jobs and housing, have been better than expected. Thursday, the jobless claims fell by 4,000 to 364,000 while analysts had projected an increase to 380,000. Housing showed the most progress in over a year as starts increased 9.3 percent to a 685,000 annual rate, exceeding the highest estimate of analysts. The US was revised to show an expansion rate of just 1.8%. It was estimated to have grown by 2.0%. This level may in many ways have the feel of a recession.

US personal income and spending was up about 0.1% as it had been in October as well. Expectations had targeted 0.3%. US durable goods orders were up 3.8% after expectations were set for 2%. The durable goods consist of everything from household appliances to airplanes. Boeing (NYSE:BA), for example, wrote 96 orders for aircraft! US New Home Sales were up 1.6% to 315,000 unit annual rate, above expectations. The improvements in the housing and job sectors were vital, but there are other hurdles still lurking.

President Barack Obama is still sensitive to the high unemployment out there, attempting to extend the tax cut to perhaps spur purchases of goods and services. While the US Dollar net long positions increased to $17.63 billion last week, it is thought that fund managers may have to sell dollars to balance their portfolios for the year-end.

The Euro Zone is still in the same position in terms of potential downgrades. It is thought that Standard & Poor’s credit rating agency may still carry through with the threatened downgrades to 15 of the Euro Zone countries in January. There are also concerns that the European Central Bank's (ECB) cheap loan program may not be as effective as originally thought. The money going back into the sovereign debt instruments may not be carried through, essentially not giving the Euro leaders the desired end result.

The International Monetary Fund (IMF) has been doing the balancing act since the ECB declined to extend the bond purchases past the existing number and loan the IMF money. The IMF is currently looking to collect $200 billion from the European Union members. The numbers do not quite add up positively, as Spain and Italy alone may require $1.25 trillion over the next three years. As of late, Hungary may also be coming to the well for about $20 billion with perhaps Egypt not far behind. No, this is not over! There is simply a pause for the Santa Claus rally possibly until January.

It will be interesting to see if the January effect will take place this year.

On the stock side: JP Morgan Chase and Co. (NYSE:JPM) was up 0.36% to $33.57. Citigroup Inc. (NYSE:C) was down 0.69% to $27.40. Bank of America (NYSE:BAC) was up 2.38% to $5.59. Alcoa Inc. (NYSE:AA) was down 0.51% to $8.86. Boeing Co. (BA) was down 0.43% to $73.97. Caterpillar Inc. (NYSE:CAT) was up 0.48% to $92.12. General Electric Co. (NYSE:GE) was up 1.00% to $18.23. Halliburton Co. (NYSE:HAL) was up 0.78% to $33.80. Hewlett Packard Co. (NYSE:HPQ) was up 0.08% to $25.90.

Tuesday, what to expect: We are technically in 2nd day buy mode on the Daily Chart unless the E-Mini S&P 500 penetrates $1196.50. Tuesday, we anticipate an inside to higher day. Today’s range was $1260.75 - $1248.75. The market settled at $1260.25. Our comfort zone or point of control for this market is $1254.75. Our anticipated potential range for Tuesday’s trading is $1264.50 - $1252.50.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.