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A flurry of disappointing economic news was not able to slow the recent bull rally. The Dow ($INDU) added 247.14 points, or 2.91 percent, to close at 8,726.61. The S&P 500 ($SPX) gained 30.29 points, or 3.53 percent, to finish the session at 887.68. The Nasdaq ($COMPQ) tacked on 67.37 points, or 4.60 percent, to 1,532.10. Volume was lighter on the session with many traders taking off early for Thanksgiving with only 1.42 billion shares traded on the NYSE and 2.00 billion shares exchanging hands on the Naz. Market breadth was positive by a 26-to-4 and 23-to-6 margin on the Big Board and Naz respectively.

A deluge of economic news was released this morning and the data was mostly negative. However, an optimistic President-elect Obama provided enough for the bulls to continue their run. The Dow has gained ground the past four sessions, up 15 percent during that time frame, but still down 36 percent year to date. Despite the recent gains, the Dow is still 800 points below its 50-day moving average.

Durable goods orders were very week in October, dropping 6.2 percent when a decline of 2.6 percent was expected. This doesn’t bode well for GDP growth in the fourth quarter. Business activity in the Chicago area was very weak in November with the NAPM-Chicago index dropping 4 points to 33.8 with a reading below 50 showing contraction.

With Black Friday just a few days away, focus is turning to the retail sector. However, the personal income and outlays report didn’t provide much hope for the holiday shopping season. Personal incomes did rise 0.3 percent in October, but consumer spending was down a sharp 1.0 percent. Consumer sentiment was also lower as measured by the University of Michigan with the index down nearly 3 points to 55.3.

President-elect Obama officially appointed former Fed Chairman Paul Volcker as the chairman of the White House Economic advisory post. At the same time, Mr. Obama promised Americans that he will have an economic plan ready to go the first day he is in office and this news seemed to be viewed positively by traders. Overall, economists and traders alike have been pleased with Mr. Obama’s cabinet choices.

Deere (DE) reported earnings that were disappointing, yet both stocks gained ground Wednesday. DE announced that earnings fell 18 percent due to a tight credit market and higher raw-material costs. The tractor maker also lowered its sales and profit forecast for 2009 to $1.9 billion and $275 million respectively, which was below estimates of $2.3 billion in sales and $352 million in profits. DE shares tacked on 8 percent on the session after dropping nearly 10 percent ahead of the market open Wednesday.

Remember, the stock market will be closed Thursday for the Thanksgiving Day holiday and will only be open a half session on Friday. I’d like to wish everyone a happy Thanksgiving, drive safe and let’s hope for a nice Santa Clause rally.

Jody Osborne
Senior Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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