E-Mini S&P 500: Upbeat Day, Lower Globex High

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Includes: BA, BAC, JPM, XLF
by: DeWayne Reeves

The E-Mini S&P 500 rose Thursday on some positive news, but it is a case of part I of II. The US Initial jobless Claims increased to 399,000 from the expected 375,000 of people filing for unemployed benefits for the first time. US Retail Sales were up 0.1%, which was the weakest read in seven months. November showed an increase of 0.4 % perhaps translating to the post-Thanksgiving shopping spree to secure discounts advertised.

US Business Inventories were up 0.3% in November showing anticipated potential growth. While the housing market is perhaps viewed as bottoming, it still is handling a glut of foreclosures, so we may not see any real growth until it is cleared.

The Unemployment rate has fallen to 8.5%, but we need to be sure that this is a progression and not a temporary Christmas occurrence. Some the earnings reports are a boost to the market, but we need to really see JP Morgan (NYSE:JPM), which should come out Friday and other banking stocks to surmise that the US is recovering. We need to see technology, energies and the financial sectors on the rise.

The Euro auctions buoyed the markets Thursday as Spain and Italy have had solid demand and lower yields. The Spanish Treasury auctioned three bonds bringing in about $10 billion euros. Italy has another round of auctions Friday of about $4.75 billion euros of debt. The European Central Bank (ECB) had issued cheap loans in the hope of supporting these bond auctions. It had been a concern that the Euro banks were hoarding the money, but Thursday alleviated some of the concerns and Friday may confirm that the move supported the Euro debt crisis. Spain needs to raise about $177 billion euros in 2012, while Italy must raise about $450 billion euros.

Fitch's commented Thursday that they may downgrade Italy by the end of the month if they do not raise the funds necessary to meet with expectations. The European leaders seem to regard the Greek debt crisis as a separate issue at present. There have been talks about the potential default of Greece and a possible leaving the European Union. As the varied financial releases unfold, it is obvious that this is a calamity that will take a great deal of time to stabilize. US Treasury Secretary Timothy Geithner had commented on his visit to Tokyo that while the Eurozone was making progress, he felt that the next step was to create a "firewall" to prevent the contagion effects.

Iran confirmed that it was enriching uranium inside a mountain a couple of days ago and since have also sentenced an American to death as an alleged spy. The sanctions that the European Union wants to impose on Iran oil shipments has caused the threats from the oil producing country to possibly block the Strait of Hormuz. The foreign ministers have moved up the meeting to discuss the ban to January 23rd. Thursday, they spoke of a potential 6-month grace period before imposing a ban. There also was a reported car bombing in Iran of a nuclear scientist that is putting blame on Israel and/or the US.

Italy, Spain and Greece import about 500,000 barrels per day from Iran out of about 600,000 barrels in total imported by the Eurozone. These countries actually had hoped for a 12 month grace period as the price breaks and deals may be hard to replace. US officials have been traveling to China, South Korea and Japan to ask them to cut purchases. This is difficult in that a country like China is possibly the largest importer of Iran oil. China also has a great interest in the US shale fields and the Canadian oil sands.

Iran is possibly offering discounts to China to barter with them, so it may be a difficult decision for the powerhouse of a nation. President Obama can block financial transactions with Iran to a certain degree, but may sign waivers to allow for countries to receive Iranian oil but only with cuts. This is a situation that can heat-up very quickly if diplomacy is not used. For the moment, Thursday looks bullish, but it is really more of a continuation of Thursday.

On the stock side: JP Morgan Chase and Co. (JPM) was up 0.52 % to $36.85. Citigroup Inc. (NYSE:C) was up 1.25 % to $31.66. Bank of America (NYSE:BAC) was down 1.75 % to $6.75. Alcoa Inc. (NYSE:AA) was up 3.32 % to $9.95. Boeing Co. (NYSE:BA) was up 1.03 % to $75.51. Caterpillar Inc. (NYSE:CAT) was up 2.28 % to $101.91. General Electric Co. (NYSE:GE) was up 0.26 % to $18.93. Halliburton Co. (NYSE:HAL) was down 1.84 % to $34.73. Hewlett Packard Co. (NYSE:HPQ) was up 1.18 % to $26.95. SPDR Select Sector Fund - Financial (NYSEARCA:XLF) was up 0.47 % to $13.93.

E-Mini S&P 500 Chart.

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Friday, what to expect: We maintain a bullish bias unless the E-Mini S&P 500 penetrates $1263.50. Friday, we anticipate an inside to higher day. Thursday's range was $1297.50 - $1280.75. The market settled at $1291.75. Our comfort zone or point of control for this market is $1289.00. Our anticipated potential range for Friday's trading is $1306.50 - $1279.50. Longer-term, if we stay on the path, we are looking for potentially $1315.00 as the next upside target.

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