More buyers than sellers! 

Why?  More buyers than sellers!  Yesterday was nothing short of amazing as the bulls squeezed out any and all would be bears that dared to get short Wednesday.  Does the market appear very stretched? Yes.  Does that mean it must necessarily selloff?  Obviously not!  Everything seems to be coming up roses for the market.  Employment is very strong; businesses are growing, wages are increasing, manufacturing is on the rise, consumer confidence is near all-time highs, housing is strong and although rising rates are still historically low.  Now the question is can earnings growth justify current prices?  Early reports seem to suggest that the answer is, Yes.  Will it continue?  Only time will tell.

On the Calendar

The Thursday Economic Calendar has three important reports at 8:30 AM Eastern time.  First, we have Housing Starts which consensus is expecting a slight pullback to 1.280 million vs. 1.297 million annualized.  November permits are expected to come in at 1.300 million vs. 1.303.  Second, is Weekly Jobless Claims are expected at 250k a slight decline from last week.  The third is the Philly Fed Business Outlook continues to show enormous strength with backlogs building as new orders pour in faster than shipments can move out the door.  At 11:00 AM is the EIA Petroleum Status Report which has shown supplies trending lower with the cold winter demand increasing.  After that, we have a one Fed speaker at 6:05 PM, some non-market-moving reports and bunch of bond actions to round out the calendar day.

On the Earnings Calendar, we have more than 45 companies expected to report today.  Banking continues to be in focus such as KEY,  PACW, and MS before the bell.  JBHT is also notable before the bell today with IBM and AXP in focus after the close today.

Action Plan

Talk about a big daily price action whipsaw!  The Dow gained more than 300 points completely reversing the big selloff just the day before.  The Dow closed for the first time above 26,000 as early short traders were squeezed out by this raging bull.  The SPY and QQQ also posted new closing records while IWM lagged slightly behind but recovering significantly from Tuesday.  Although the market appears to very stretched, the simple fact is there are still more buyers than there are sellers.  Fear of a market correction seems non-existent as the bulls relentlessly charge higher.

As always I will stay with the trend, but I must admit to being very cautious about the wild enthusiasm the market is displaying.  Bullish complacency such as we see right now can quickly backfire so stay very focused on price action for clues.  With the futures pointing to a bullish open try not to get caught up an chasing stocks already well within a run.

Trade Wisely,

Doug