Option Investor
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Remaining economic data favorable

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Today's second dose of economic data has stocks pushing higher as the consumer confidence number came in much stronger than expected. December consumer confidence jumped to 93.7, which was higher than the consensus estimate of 82.7.

Also better than expected were today's housing numbers. New home sales for November rose 6.4% to 934,000, which was higher than consensus of 870,000. Existing home sales fractionally higher that consensus estimates of 5.17 million, with November sales rising 0.6% to 5.21 million.

The Chicago PMI rose 41.4% in December, which was less than consensus of 45%.

The number that most figures would get the bulk of the attention was consumer confidence and today's reading was quite a bit stronger than most expected. Economists factor in the "holiday season" as a reason for a higher confidence, but today's 93.7 reading was a rather large upside surprise.

On the housing front, some economists are pointing to that being a "November number" and are now worried that the higher YIELDS found in the bond market that impact mortgage rates may squall an otherwise bullish looking number going forward. While today's housing numbers are strong, some economists will fear that any economic turnaround currently at hand may not be strong enough to keep buyers in the market as mortgage rates have moved higher since November.

The Markets

Stocks added to their early session gains on release of "round 2" economic data from 10:00 AM EST. The Dow Industrials were able to briefly pierce a post September 11th high of 10,170 and have been hovering around this range for the past hour. Bulls are now pushing for a Dow $10,300 based on our retracement.

Dow Industrials Chart -

Today's economic data didn't hold any "negative" surprises. Consumer confidence is key going forward, but the PMI data and recent durable goods and PMI indicate that there's still a bumpy road ahead before an economic turnaround is certain. Technicals for the Dow Industrials look favorable for a push to the 10,300 level. Psychological support should now be getting firm near 10,000 with good technical support shaping up near 9,900.

Oil Service (OSX.X) +2.5%, Internet (INX.X) +2.4% and Biotechnology (BTK.X) +2% lead sector gainers. The only sector I have in the red at this time is the Utility Index (UTY.X), which is down just fractionally.

Jeff Bailey
Senior Market Technician
Option Investor

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