Welcome back

Hello, just back from a short hoilday in Australia and would shortly resume my trading again.

November was somewhat unusual . Historically tends to be one of the weaker months of the year for the market. That is definitely not the case this year, with a relentless rally still moving forward.

Economic Reports – This is probably the ‘rocket fuel’ that is leading this rally. Last week the Producer Price Index (PPI) came in with a decline of almost 1% for October. If energy prices are included the October decline was just over 1.5%. This helps the market because inflation concerns have been at the forefront of the bearish case for the last several months. To add to this, the Consumer Price Index (CPI) came in with just a 0.1% increase for October. Although this is all good news for the bulls, the Federal Open Market Committee (FOMC) did note last week that they are still concerned about inflation. But even with this concern, this factor should be rated as a bullish one for the market.

Energy Prices – Along with the rest of the good inflation news, oil prices continue to decline. The December crude oil futures contract dropped almost $5 per barrel last week. After all the doom and gloom in the media during the summer about oil going through the roof, it is now hardly mentioned in the mainstream media. This is also a bullish factor for the market right now.

Earnings Reports – The main earnings season is now over, but November does bring earnings reports for the major retail stocks. There was really no outstanding news here, with Wal-Mart and Target coming in slightly above estimates, and Home Depot missing estimates. Overall this is probably a neutral factor for the market right now.

Other factors – We are about to start the holiday season, which means a couple of things for the market. First of all, next week should be fairly quiet for the market, with no trading Thursday and a half day on Friday. The other areas the market will be watching are any reports or comments about the holiday shopping season from the major retailers. Good reports would likely keep the rally going, while some disappointing numbers could start a market pullback of some kind.