Friday's market promises more of the quiet drift that characterized Wednesdays' shortened session.
Traders say there could be an upswing in stocks in the next several days, before year-end, but they don't expect much volume. The Dow rose nearly 49 points Wednesday to close at 8468, and the S&P 500 finished up 4.99 points at 868.15.
Scott Redler of T3Live.com, who watches the market from a technical perspective, said he is currently neutral to negative on the market based on what he sees.
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"There are big time levels to watch right now, and active traders aren't long or short right now. They are waiting to see which way the market goes," he said.
"The key level of support on the S&P is 845 to 855, but any close below 815 to 825 could ignite a move to retest the lows in the New Year," he said. "If they get us back above 880 to 890, that could put the market back in a more constructive composure that should induce new money to buy the market," he said.
The next level then would be the resistance levels of 960 to 980.
"There are a lot of people that say the last five days of the year and the first five days of the new year are indicative of what the coming year will be like. Last year was the first year in a while that we were down in December and that gave us clues," he said. "This year is a little bit of a wild card because so many people have withdrawn from the market in the last two months."
Oil continues its decline and threatens to close out the year at its lows. Crude on the Nymex fell more than 9 percent in thin trading Wednesday to $35.35 per barrel on stronger than expected inventories.
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Daniel Yergin, chairman of Cambridge Energy Research sent us his thoughts on what we could see in the oil market in 2009.
"The oil market will be dominated in 2009 by the same thing that is dominating everything else—GDP and a global recession. Just as strong economic growth drove the oil market starting in 2003/2004, weak growth—or the absence of growth—will be determinant here. If it turns out that, stimuli notwithstanding, global economic growth in 2009 is only 0.2 percent or even negative, then the oil market will certainly be in CERA's "global fissure" scenario, and then prices would be in the $40 to $50 range—perhaps somewhat higher if the oil exporters show very substantial discipline.
That means budgetary turmoil for some of the oil exporters, and that the "rainy day" sovereign wealth funds will be put to work much sooner than had been expected. Investment priorities across the energy spectrum—conventional and alternatives and renewables—will be reprioritized and reprioritized again. We do see a substantial build up coming of spare oil production capacity—from just 1 million barrels per day in 2005 to 7 to 8 million barrels per day in the 2010-2012 period.
What would be the surprise? That the the biggest downturn since the Great Depression is turned around sooner than people expect by the biggest coordinated global economic stimulus program that the world has ever seen."
To Our Readers
Happy holidays! We will publish Market Insider's "Week Ahead" on Friday, and I will return Tuesday.
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