The major market indexes charged higher in Friday's half-day trading session as the oversold bounce remains in force. The day before and the day afer Thanksgiving tend to be up days, though both Thanksgiving 2009 and 2011 saw a change in the long-term pattern with downside action dominating the day before and after the holiday, so take seasonality for what it's worth. The main impetus behind the bounce was more ceasefire news coming out of the Israeli-Hamas feud, news that Greece is likely to get its latest round of bailout money, and further hope of a resolution on the fiscal cliff issue.
In economic news, a record 247 million Americans shopped in stores, both physical and online, during the four-day holiday weekend, up 9% from the same period last year, the National Retail Federation said Sunday. A total of 89 million Americans shopped online and in brick-and-mortar stores on Black Friday, up from 86 million in 2011, according to the survey conducted by BIGinsight for the NRF. The average holiday shopper spent $423 this weekend versus $398 last year, a rise of 6%.
Apple (AAPL) also continued its bounce on lower volume after undercutting the key 522.18 low in its prior base two Friday's ago. If the market continues to rally AAPL could potentially rally to its 200-day moving average at around 597.
The SPDR Gold Shares (GLD) and iShares Silver Trust (SLV) ETFs have both cleared their 50-day moving averages and Friday's action came on reasonably strong volume for a short holiday trading session. If volume is extrapolated out to a full trading day, both the GLD and SLV can be seen as issuing pocket pivot buy points through their 50-day lines. This offers an initial entry point for the precious metals which could begin to benefit from a delayed "QEternity" effect and the likelihood that growth in U.S. government debt will continue unabated, regardless of whether a compromise to the fiscal cliff is reached or not.
While we consider the action in the precious metals ETFs actionable on an initial position basis, we fail to see any breadth of emerging leadershp that makes a potential new "uptrend" in the market a high-probability play on the long side of the market. We tend to think that trying to make an oversold bounce into a so-called "confirmed uptrend" is akin to trying to make a silk purse out of a sow's ear. This does not mean that the oversold bounce cannot continue, but we would certainly look for further, confirming evidence of a market turn and new rally phase before deploying aggressively on the long side, if at all.