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Market Wrap

Horn of Plenty

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The S&P 500 (SPX.X) 887.68 +3.53% rose for a fourth-straight session, something it hasn't been able to do since April after traders digested a plate full of weak economic data brought on by the continued credit crunch.

Global Economic Calendar - 11/26/08

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Not unlike a Thanksgiving dinner with all the "fixings," today's economic calendar was full.

Prior to the opening bell, hors d'oeuvres were served with October durable goods orders falling a more notable 6.2% as tight credit conditions found weak demand for high-priced items like cars, machinery and computers.

U.S. consumers cut spending during October at the steepest rate in more than seven (7) years according to the Commerce Department, while those with jobs (that have received a paycheck for services rendered) saw their income rise by 0.3% in the same period.

The Dow Jones Home Construction Index (DJUSHB) 212.00 +10.85% was atop today's list of sector winners.

The Commerce Department reported sales of new single-family homes, seasonally adjusted, fell by 5.3% in October to a seasonally adjusted 433,000 annual rate. Total October sales of new single-family homes have fallen 40.1% from October'07.

The median sales price of a new house sold in October was $218,000 vs. $234,000 a year ago. The average sales price was $272,300 vs. 310,100 a year ago.

Shorts came into cover as the months' supply came in at 11.1. While October's months' supply was up 1.83% from September's 10.9, I'm noting Augusts' 11.4 and March's 11.2 measures remain near-term high levels.

Exacerbating the advance was Moody's and Standard & Poor's downgrading their credit ratings for KB Home (NYSE:KBH) $12.40 +18.66%, DR Horton (NYSE:DHI) $7.52 +8.98% and Ryland Group (NYSE:RYL) $16.81 +12.36%, which have recorded steep losses tied to tight credit and the slowed housing market.

Having achieved point and figure chart bearish vertical counts last week and crude oil stockpile levels unchanged versus a year-ago, Nymex Jan'09 Crude Oil (cl09f) settled up $3.67, or 7.23% at $54.44 after the EIA said U.S. stockpiles rose by 7.28 million barrels to 320.83 million barrels.

On the demand side of things, the EIA said weekly crude oil inputs rose by 280,000 barrels/day to 14.84 million barrels/day as refinery operable capacity rose to its highest level since Hurricane Gustav and Ike struck the Texas Gulf shores.

My number of days of supply of crude oil rose to 21.9 days supply from last week's 21.4.

Not shown in the above economic calendar was China's announcement that it had cut its key interest rate for the fourth time this year. The People's Bank of China cut rates by 108 basis points to 5.58% with the deposit rate dropping the same amount to 2.52%.

S&P Depository Receipts - 15-minute intervals (01:15 PM ET)

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With volume turned on, the S&P Depository Receipts (SPY) were trading at an important institutional level of resistance having gapped lower at a near-term level of institutional support of 84.17 as depicted by the weekly pivot retracement.

Advance/decline lines were holding positive at both major exchanges by better-than 2:1 margins.

In recent sessions, Exxon Mobil (NYSE:XOM), which gained $2.78, or 3.55% by the close at $80.89 has become a "bellwether" stock for the S&P 500, as well as the Dow Industrials (INDU) as it vies for the most heavily weighted stock in both of these widely quoted indexes.

Oil as depicted by the US Oil Fund (USO) finished up $3.18, or 7.68% where the above screen capture suggests an already volatile session under way.

Exxon Mobil (XOM) - 15-minute intervals (01:33 PM ET)

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XOM has been a major reason for the plentiful gains (SPX/INDU) since late-Friday afternoon and having pressed its own WEEKLY R1 late Monday, seemed tentative just after the lunch-hour crowd returned to their posts.

Natural gas prices were also on the rise after the EIA reported a 66 Bcf draw in the latest week to 3.422 Bcf.

No sooner than the above screen captures been taken when news hit the wires that terrorist targeting British and American citizens had killed at least 80 people and had taken 100 hostages in at the Taj Mahal Palace hotel and the nearby Oberoi hotel in Bombay, India.

Dow Diamonds (DIA) - 60-minute intervals (01:55 PM ET)

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With volume turned on, the Dow Diamonds (DIA) were once-again facing perhaps the biggest test of the majors as this 30-component PRICE-weighted index was once again pressing its WKLY R1, and "old" upward trend from the 10/10/08 low of $78.94.

It was time to check on one of the WEAKEST indices, to see how the "tail" of our inchworm was doing.

Russell 2000 ($RUT.X) - 60-minute intervals (02:30 PM ET)

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Financials, which had been strong since President-Elect Obama named Timothy Geithner to head the Treasury department had broken above their short-term trend, but looked "squared up" with the other major averages at its WEEKLY R1. How humans could get these matches is beyond the comprehension of most traders.

Institutional computers. That's relatively easy and suggests major institutional interest in these markets.

Perhaps one "key level" I alerted traders to in Tuesday's Market Monitor (before server crash) was the Semiconductor HOLDRs (SMH), which was a sector that was testing its WEEKLY Pivot of $15.73.

Yes, even after networking giant Cisco Systems (NASDAQ:CSCO) $16.39 +6.29% news that it was planning to shut its North American offices for five (5) days (12/29/08-01/02/09) for the first time in more than a decade in hopes to save $1 billion in costs.

Closing U.S. Market Watch -

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And by the close, there was a lot of green on the screen!

Volume at the big board was very light with just 5.79 billion shares changing hands. Advancers outnumbered decliners by a hefty 2,677:469 margin. There were 18 issues that traded a new 52-week high, while just 92 issues witnessed a new 52-week low.

NASDAQ volume was equally light at 2.0 billion shares. Breadth was positive at the close with 2,275 gainers and 601 decliners. New highs matched that from Tuesday at 5, while the new 52-week low tally was 129.

The S&P 500 recorded zero (0) new highs for an eighth-straight session, but the six (6) new lows a relief from Thursday's 263.

The Russell 2000 sported seven (7) new highs today. That is the most in recent memory (6 on 11/03/08) and near matches from 09/29 and 09/28. After seeing 699 on Thursday 11/20/08, today's 29 also a relief, but still a bit shy of 15 and 14 from 11/03/08 and 11/04/08.

On the earnings front, Deere & Co (NYSE:DE) $35.76 +8.03% recovered from a gapping lower trade of $28.87 after the farm equipment maker warned that earnings would dip in 2009 as the weakening global economy threatened to end the 5-year boom in sales. Deere said its Q4 net fell to $345 million, or $0.81/share.

Freddie Mac (NYSE:FRE) $0.79 +49.05% inched higher after receiving another $13.8 billion from the Treasury. The company said that as a result of the draw, total liquidation preference of senior preferred stock rises to $14.8 billion from $1 billion. The mortgage company said funding was provided in order to address Freddie's deficit in stockholders' equity that existed at September 30.

Major Global Indexes, Currencies, USO, GLD, HUI, OIX, XLF, DJUSHB

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Some quick notes where I would want to provide emphasis per recent Market Wrap is that "oil stocks" as depicted by the OIX.X are now outperforming the USO, which did achieve its bearish vertical count of $40.00 last week.

If it is true that stock price action leads the commodity price action, then oil traders should be getting flat from bearish.

HUI's 44.27% gain since Wednesday really starts to narrow the "GLD/HUI" gap from prior notes and recent sector bell curve analysis has the PRECious metals group the STRONGEST of sector internals followed.

Have a wonderful Thanksgiving Holiday!

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