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The market is kicking 2009 off with a nice, broad rally today. Oil is rallying on increased tensions in the Middle East, and the news that Russia shut off supplies of natural gas to Ukraine. XOM and CVX led oil stocks higher. I’m not convinced that oil will start an uptrend here, but it would seem that the reduced output by OPEC would set the stage for a rally on signs of a stronger economy or more geopolitical turmoil. GM was up sharply (up 16% at the time of this writing) as it received an initial $4 billion installment of government bailout money on Wednesday, and news that GMAC no longer had exclusive right to provide loans to borrowers who buy GM vehicles. This allows GM to provide financing though other lenders, which may help the company’s sales. The CBOE’s VIX volatility index continues to get pushed lower, breaking below 40% today. It seems to be having trouble finding a range to trade in. Right now, it’s dropping faster on market rallies than it’s rising on market declines. That suggests a growing confidence in the market, which could be setting up for another big surprise on the downside, or a long slow grind higher.
Economic data for next week includes: Nov construction spending and Dec auto and truck sales on Monday; Nov factory orders on Tuesday; oil and gas inventories on Wednesday; initial jobless claims on Thursday; and Dec payroll data and unemployment rate and Nov wholesale inventories on Friday.
Tom Preston
thinkorswim, Inc.
Member FINRA/SIPC/NFA
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