WaveStrength Market Trends for December 7, 2006
Market Indecision
by Ann Sosnowski
For the third day in a row, the Russell 2000 Index (RUT) is putting in a doji formation: a daily candlestick that illustrates indecision amongst the investing herd.
These are also reversal signals. On December 4, the RUT ran up pretty extravagantly, looking to break into $800, past a historic high. The next day, it put in a doji, which meant the trend would correct slightly.
On December 6, the RUT opened lower than the day before, but put in another doji, a reversal signal, showing that a gain would be made the next day.
Well, today, the RUT opened higher… but it’s still not going anywhere. After hitting a new historic high at $801.01, you can see why investors are so nervous to keep it going… if economic data isn’t as strong.
With the Dow up this morning, then down this afternoon, and now showing a slight gain of 12 points, it looks like the rest of the trading week is on hiatus until tomorrow.
That’s because the monthly jobs report comes out tomorrow. This morning, the Labor Department announced that first-time initial unemployment claims fell by 34,000 to 324,000, down from a revised 358,000 the week before.
Additionally, on Wednesday, it was reported that stronger-than-expected payroll growth occurred in the month of November.
Payroll numbers that are substantially above forecasts could be construed as negative to the Federal Reserve… with cautionary measures taken against wage inflation. Bernanke has expressed concern not only about inflation, but the heating up of the job market.
Which is why tomorrow’s job data is so important.
And why not much is happening in the stock market today.
If numbers are in check, then we should see a nice rally to round out the trading week.
If not, I doubt the Dow Jones Industrials or the Russell-2000 will hit historic highs for a few more days.