Stocks are experiencing a bullish session as the Dow Industrials looks to challenge both the psychological and technical 9,000 level with a 239 point gain (+2.76%) as a "horn of plenty" shows up on the bull's Thanksgiving feast table in what has historically been a bullish day for stocks.
In Monday's Index Trader Wrap at OptionInvestor.com, we referenced the Stock Trader's Almanac and historical tendency that showed the Wednesday before Thanksgiving showing gains in 37 of 49 year (75%), between 1952 and 2000 and improving marginally on the Friday follow the Thanksgiving holiday at 39 of 49 (77.5%). While the Stock Trader's Almanac didn't count last year's data as the log book was most likely going to press, last year's seasonality also played out to a bulls liking.
The historically bullish near-term time period for stocks was bolstered today by some economic data that suggests a "double dip recession" may be unlikely. Weekly initial jobless claims, durable goods orders and Chicago PMI all came in above economist's forecast. While the data wasn't exceedingly strong, the numbers showed little confirmation that a double-dip recession would be likely.
While the major market averages are firmly in positive territory, the S&P 500 Index (SPX.X) 937.89 +2.69% has broken above last week's relative highs of 937.28, but haven't seen a euphoric surge on any type of short-covering panic at this point. It may well be that the higher level of bullish %, which shifts risk to bulls is keeping some bulls from getting overly aggressive on the "buy side" of things, and while bears are probably less than calm, cool and collected, the higher levels of bullish % give a bear "hope" that things will cool down a bit. However, as mentioned previously, the "football" field is 100 yard long and the bullish % range is 0% to 100% and there are no written rules that say the Bullish % can't run the gamut of bullishness or bearishness. Historically, the S&P 500 Bullish % ($BPSPX) has had a very difficult time achieving levels much above the 75% level and current level of bullishness as of last night's close was 65%.
For a review of this commentary, traders can reference back to our 01:00 Intraday Update from 11/22/02.
Semiconductors as depicted by the Semiconductor Index (SOX.X) 380 +6.32% are breaking above Monday's high and now look set to challenge the trending lower 200-day SMA of 409. Positive comments out of chip equipment maker Novellus Systems' (NASDAQ:NVLS) $37.60 +9% in last night's mid-quarter update has that stock breaking above its 200-day SMA of $36.21.
From recent bullish profile in our intra-day commentary, chip- equipment bellwether Applied Materials (NASDAQ:AMAT) $17.54 +5.91% is breaking to relative highs and compares to the 200-day SMA observation in NVLS, AMAT's 200-day SMA is still higher at $18.94 and I'd continue to target that longer-term moving average as a bull's target. As a bullish % reference, according to Dorsey/Wright and Associates, the semiconductor bullish % (BPSEMI) is now at 72%, up markedly from late September's 8% reading. As such, bulls should be trading targets originally outline in THEIR own trading plan.
Sector action remains positive with just the Gold/Silver Index (XAU.X) 61.95 -2.02% now further extending losses and Natural Gas Index (XNG.X) 143 -0.42% hovering near its lows.
Treasuries have found a good round of selling this morning with the 10-year bond futures (ty02z) 112'055 -1.12% lower, and YIELD ($TNX.X) jumping to 4.254%. This yield level is now challenging the October 22 relative high YIELDS and equity bulls would love nothing more than to see a continued move higher into next week to further fuel a rally in stocks. This action may become increasingly more important with the major bullish % charts either in "overbought" 70% territory or nearing these 70% levels in the Dow Industrials, S&P 500, S&P 100 and NASDAQ-100. The much broader NASDAQ Composite and NYSE Composite are at the 47% levels, but have historically found it tough to get much above 54% as they are very broad and comprise over 3,000 stocks each.