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Markets trade like Santa looks

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It was a trade-shortened session that found stocks sinking back near their lows of the session and not unlike Saint Nick, equities wore red for the bulk of the session.

I could find no market news to "explain" the lower trade in the latter 1/2 of today's session, other than to think traders were trying to finish flat into the 1.5 day market closure for the Christmas holiday.

Of the many sectors we follow on a daily basis, only Drugs (DRG.X) 303 +0.48%, HMO's (HMO.X) 519 +0.03% and Utilities (UTY.X) 257 +0.17% managed to finish the session green.

Downside sector action had the Networking Index (NWX.X) 136 -2.03% and the Gold/Silver Index (XAU.X) 76.00 -2.02% pacing sector declines, while the Wireless Telecom (YLS.X), Fiber Optic (FOP.X), Combined Telecom (IXTCX), N. American Telecom (XTC.X), Semiconductor (SOX.X), Internet (INX.X), Oil Service (OSX.X), Banks (BIX.X and BKX.X) along with Broker/Dealers (XBD.X) all fell between 1 and 2%.

While the trading day was cut short, volume was rather light given the 01:00 PM EST close as many market participants didn't show up for today's trading. NYSE volume was 460 million shares, while NASDAQ turned 524 million shares.

Breadth was negative, but not noticeably so with losers outnumber advancers by an 8 to 7 margin on the NYSE, while breadth was negative at 17 to 13 on the NASDAQ.

New highs versus new lows breadth was positive at both the NYSE and NASDAQ, with 41 stocks hitting new 52-week highs on the big board versus 27 stocks trading new lows. NASDAQ had 39 stocks atop the Christmas tree, while 34 stocks found a lump of coal in their holiday stocking.

When trading resumes on Thursday, 09:30 AM EST, the markets will have gotten a look at the recent weekly jobless claims numbers, which are due out at 08:30 AM EST. Bulls didn't find today's release of November durable goods providing any type of seasonal Santa Claus rally, and economists forecast for weekly jobless claims to come in at 405,000 compared to the previous weeks 433,000 isn't going to feed Santa's reindeer either. It's my best guess that weekly jobless claims of 380,000 or lower will be needed to whip up a rally.

In today's "market monitor" at OptionInvestor.com, we discussed a head/shoulder's top on the Dow Industrials ($INDU) 10-minute chart, where the "neckline" of 8,465 had been broken and currently has a downside objective of 8,380 in play near-term.

A quick look at the NYSE Composite (NYA.X) 476.97 -0.46%, which many investors and traders consider the "real" or "true" market shows support at 475 still holding, and this may give thought that today's action in the Dow Industrials might have been a technical trap. Let's face it. Light volume, 1/2 session it can be a little easier to push 30 Dow stocks around a bit to suck in some bears.

But if the NYSE Composite (3000 stocks) is broken to the downside, look for that type of technical action on a much more symmetrical head/shoulder top to be some confirmation of the technical weakness we saw in the Dow Industrials today.

NYSE Composite Chart - 10-minute interval

While the Dow Industrials broke a similar neckline that we see in the 10-minute chart of the NYSE, its POTENTIAL neckline still holds as support. On Thursday morning, traders may want to monitor a "confirming" break lower in the NYSE below 476.50. If that should take place, then my feeling is that the NYSE serves as a "sledge hammer" that helps drive Dow lower.

Have a good day-and-a-half rest and happy holiday. If you didn't trade today, I don't think you missed much and half-session trading days don't "mean a lot." Still, it is a bit unnerving to bulls to see a lower trade when most "sell side" traders aren't around.

Jeff Bailey

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