While Wednesday's trade shortened session left bulls wondering if there was any type of chance for a late year Santa Claus rally, perhaps this morning's 100-point gain in the Dow Industrials (INDU) 8,560 +1.2% and recouping of Tuesday's losses is proof that Santa is for real.
While trader's don't seem to be reading a lot into today's light volume rally, the ability for the Dow Industrials to get back above the 8,520 level gave shorter-term bears little hope that the recently pointed out head/shoulders top on the 10-minute interval chart wasn't going to pan out on a short-term basis and the Dow rocketed higher after breaking above what bears had looked to be a right shoulder formation. I'd now look for pullbacks to the 8,500 level to find some support on any type of intra-day pullback at/near the 8,500 level. For a rally to continue into the weekend, I'd think bulls want to see a close above the 8,550 level. This morning's high on the Dow has been 8,565.
Sector action has been broadly positive with the bulk of sectors showing gains of 1% or greater. The Airline Index (XAL.X) 38.53 +3.24% has built on its earlier gains of +2% after UAL Corp. (NYSE:UAL) $1.17 +11.42%, which is in Chapter 11 bankruptcy said that its ongoing bankruptcy filings could lead to lower pay, more layoffs and tougher work rules for the company's unionized employees. The perception becomes that workers would not concede enough was one of the factors that led a federal panel to reject UAL's bid for $1.8 billion in taxpayer-backed loan guarantees, and that future dealings by UAL and other airlines that employ unionized workers may now be in a stronger position and be able to apply leverage over unions when negotiating new contracts.
The CBOE Internet Index (INX.X) 91.72 -1.08% leads this mornings short list of sector decliners, largely in part to weakness in shares of online retailer Amazon.com's (NASDAQ:AMZN) $20.26 -7.31% declines. While there is no news today to explain AMZN's price action, it may be that a combination of fears that holiday sales disappointed the retailing sector have bears pressing their case given the stock's higher valuation versus sector peers.
The bond market is very quiet and a quick glimpse of the bond pits on CNBC's morning show looked more like a garage sale on a Thursday morning where bond traders simply seemed to be rather disinterested in trading today. Most likely it is that institutional traders are enjoying an extended vacation after the Christmas holiday and not a lot of orders to be initiated.