2:15pm (EST)
The market is trying to hold onto today’s gains following a strong open by the bulls on better-than-expected economic data. Futures were slightly higher before the bell but got a huge pop after jobless claims came in well below estimates. The session started with a bang as the Dow surged triple-digits at the open but the bears made an appearance shortly after the Philadelphia Fed report which caused a pullback despite better-than-expected numbers.
We said the bulls needed good news and today’s weekly jobless claims showed a drop to 366,000, which was below expectations for 390,000 claims. We were hoping for anything under 400,000 to avoid a selloff and the only thing that worries us is that the jobs report is seasonal right now. Meaning, what happens in January when all the Holiday Help is let go?
Elsewhere, the Producer Price Index (PPI) increased 0.3% versus expectations for a rise of 0.2%. The Empire Manufacturing Index came in at 9.5 which was much higher than the expected print for a 3.0 print. And finally, the Philly Fed Survey came in at 10.3 compared to expectations for a reading of 5.0.
It is nice to see a rebound but it is clear Wall Street remains concerned over the debt crisis in Europe. The major averages seem to be drifting sideways as we head to press and if the gains hold, it appears we could be stuck in a continuing trading range. At some point we will get a breakout or breakdown but it may not come until January as we see the market range bound through yearend.
The good news is we are building an impressive Watch List to play the market’s next move and we are getting close. In the meantime, we are also looking for a few more covered call candidates because if we do stay range bound we want to at least put some money to work.
As we head to press, the Dow is up 82 points to 11,905 while the S&P 500 is higher by 7 points to 1,219. The Nasdaq is showing a pop of 9 points to 2,548. Subscribers, check the Members Area for the updates.