Macro Outlook

Gas at the pump is up again this week. Trilby Lundberg reports that prices nudged up another two cents to $2.29 for low-test gasoline. 

As we move toward the great holiday peregrination, I thought I'd put that into context for you: That's 5% higher than this time last year, for those of you who still think that there is virtually no inflation. 

And it's 59% higher than this week in 2000, just prior to President Bush taking office.

By the way, the Dow was doing pretty well then as well. Not great, mind you, as it was well off its recent high of 11,401, but 10,915 is still nothing to sneeze at, and a lot better than things were about to become. 

More tonight on inflation, deflation, and triple-digit gains (personally, my favorite of the three)…

Market Trends

The Dow is up another forty points this morning from the open. 

As I stated in Friday's Market Report, the current rising leg is just entering overbought territory. 

The high for the week should be somewhere near Dow 12,649, according to calculations derived from the Blue Chips' last rising leg. 

Trading Tactics

It's about this time when you start hearing rumors about a “Santa Claus Rally.”

Considering the high level of Merger & Acquisition activity, the market doesn't need an end-of-year rally to keep the gains coming. 

Just this morning, in fact, shares of Harrah's Entertainment (HET:NYSE) are up over $2.00 on rumors that the company's on the verge of being sold to two private-equity firms.

Elsewhere, Norway's Statoil ASA Ads (STO:NYSE) has agreed to buy the oil and natural gas division of Norsk Hydro AS ADR (NHY:NYSE), which is helping shares gain 22% on the day.

Although I'm not comfortable having a market that relies on M&A activity to extend its gains, you can't ignore the upside that it's creating. That's why we have WaveStrength Traders and WaveStrength Options Weekly readers positioned in a number of upside and downside plays. 

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