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A bumpy start on reignited “How long and how deep” economic concerns has taken a quick backseat to more “Obamaistic” price behavior. As of 11:10 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are up .75% to 1.40% on stronger levels of investor interest.

For the early birds, umm bears and bulls looking to schnitzel more than a little from Tuesday’s upside technical rebuttal—industrial metals (SLX) giant Freeport McMoran (FCX) and coal producer Alpha Natural Resources (ANR) are weighing in on peers (MEE, ACI) and select infrastructure / building (XLB, GDX) related issues.

Freeport slashed its copper production plans due to the all-too-familiar weak corporate confessional of a operating environment and also suspended its healthy but suspect 8.30% yearly dividend; if traders bothered to compare it to its 5-year 3.60% average. For its part, Alpha Natural cut its Q4 forecast on coal shipments and warned of an uncertain 2009 due to weakened customer steel markets. Intraday, shares of FCX are off 18% at 17.90 and ANR down nearly 13% at 16.50.

A warning from handheld device giant RIM (RIMM) was also an early drag on gadgets, gizmos and market prices as hope for a merry holiday turned decidedly less so. The maker of the popular Blackberry and soon-to-be released Storm product warned on for its upcoming Q3 profit and sales outlook. Management cited a stronger US Greenback (UUP) and lower shipments of existing inventory lines.

Nonetheless, after demonstrating relative laggardship to the downside, shares of RIMM are up .75 near 38 after rallying from lows of 35.09. Technically, the action has afforded a near test of a prior “loose lateral” breakout range set back December 2004 – September 2006 from a daily chart descending wedge pattern.

Helping prompt some of the turnaround in the gadget manufacturer, many and most tech group mates and retailers (AAPL, RTH)—shares of Amazon (AMZN) are testing three week highs following an intraday upside surprise on e-commerce spending. According to comScore, sales jumped by 15% for Cyber Monday to record levels and registered a year-over-year 13% for the four day holiday period. Intraday, shares of AMZN are up 3.43 at 44.62.

On the economic front, the data has been mixed on the session; with the more ominous-looking stats receiving the early benefit of the doubt. Private employment as measured by the ADP Survey came in below forecasts calling for a reduction of 205K with an actual figure of 250K.

October’s jobs data was also revised to reflect the weaker jobs picture. While the ADP isn’t typically a strong read on Friday’s more closely-watched monthly jobs report, the loose correlation and existing negative sentiment, weren’t hard to induce a sympathetic “Sell, Sell, Sell!” reaction out-the-gate.

Separately and giving bulls a more “Obamaistic” outlook, a bit of good but slightly dated news on productivity and an intraday read on national service conditions from the ISM have helped turn the tape in favor of the bulls. For it’s part and somewhat lost in a sour premarket, Q3 productivity was revised upwards by 0.02% to 1.3% and much stronger than an expected 0.9%, while unit labor costs dropped by 0.08% to 2.8%.

Intraday and apparently affording bulls the opportunity to climb a wall of worry, the ISM Services Index saw its hardest contraction in its eleven year history. A November reading of 37.3 fell more than seven points from the prior month’s level, well-below estimates of 42.0 and deeper into contraction territory.

In those sometimes intertwined markets, the iShares 20+ Year Treasury ETF (TLT) is taking a slight breather from a parabolic-looking flight-to-quality lift over the last several sessions. The action is likely helping to support investor appetite for equities, but far from suggesting a risk tolerant attitude just yet.

Separately, Black Gold (USO) is off fractionally in volatile trade and following surprise (not really) off-the-mark weekly inventories data which saw crude and gas drawdowns [-456K, -1.5M] versus estimates calling for increases. The decline marked the first such reading in nine weeks but oil bulls it seems—still have other market concerns on their minds given the reaction thus far.

And finally, heading through the Noon Balloon and prices are off their best levels but holding strong. “Fair warning” mused yesterday over short-lived “buy the dip” opportunities proved presciently correct. Of course, the percentage chop shop lower to the unchanged level proved fleeting as well, as ever-volatile conditions reversed back to session highs.

Why the play-by-play rehash? While conditions remain treacherous, Tuesday’s action did mark an intermediate-based follow-through or FTD on day seven of the count. For growth traders it’s important signal in confirming a playable bottom—albeit far from the final word.

Most industry groups are still not showing classic signs of base development near 52-week or all-time-highs. Further, the fore-mentioned volatility is still wrecking havoc on slightly inappropriate for-the-occasion; traditional 7% - 8% stop losses. That being said, “buying the dips, selling the rips and making use of other important options” continue to be stressed by this market strategist.   

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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