Indecision is the word of the day as the broader market did have 1% gain, but most of that was from a gap up. For the day a nice doji formed telling us the market doesn’t know if it wants to go higher or come back down. There needs to be a catalyst to propel the market in either direction and it may be the “buy the rumor, sell the news” with the auto industry bailout. There is also the possibility that the economic data coming out on Friday will be such a catalyst.
We do get some data tomorrow that could be a catalyst as well and it comes in the form of the weekly jobless claims. The street is expecting 530K so keep an eye on that number to see if we get a hotter or colder number at 8:30. The last two weeks we saw colder numbers (less than expected) for the weekly data but for the week of November 20 we had a hotter number (more than expected) by 34K jobs.
Costco ($COST) has earnings tomorrow and according to the front month straddle the market is looking for a $4.50 move. With the stock currently trading at $53.61, that’s not quite a 10% move post earnings. The trend recently has been bullish as some higher highs and higher lows have formed. If their earnings are decent and (more important) their forecast is good for next quarter COST could drive higher towards the 200 MA. If the inverse is true then we could see a test of the prior low down around $45 be tested.
Tomorrow we get the weekly jobless claims, trade balance, import prices and natural gas inventories. COST and CIEN are the S&P 500 companies that are reporting earnings.