Mini Thanksgiving Rally in the Making

The week after Thanksgiving is usually a set up for higher markets. Shopping season’s kicking in, inflation, employment and GDP reports are out, consumer sentiment and spending numbers are out in the open, oil and gasoline inventories stable to up, housing data is weak, but expected, and consumers are pretty much feeling good about themselves.

Low unemployment means high employment. High employment means that most have jobs, and with a little bit of luck will start spending. Housing is in a bad condition, but I don’t believe it will deteriorate further. The correction might be winding down, and people are really going to focus on the upcoming beauties and charms of Christmas. After Thanksgiving, rested traders usually scoop up stocks hoping for a Santa Claus, end-of-the-year rally. Some are even feeling really good after getting a great deal during the Black Friday’s giveaways. Big discounts are expected to boost weak-consumer spending, and with the value of the greenback we can even expect some neighbors from the North (and other travelers) to scoop up great values.

Great things are setting up for before and after we fill up our bellies with turkey meat and other Thanksgiving goodies. How good? Well, many are ready to try their luck again after all is set and done, and many are hoping for the traditional year-end rally. I’d say market is going to please them to a certain degree. We are going to rally from here; we are going higher, but not by much (at least not initially). So, the pre-after-Thanksgiving rally will bring us to 13,750 (13,800) in Dow Jones Industrials and 1,525 in S&P (please see charts below). At about those points it may get tricky, but we’ll see how it all plays out there once we get there. Right now, get ready, and enjoy your Thanksgiving market plays.