Market Analysis for Nov 26th, 2003

Please Note: Mike's Mid-Day Minute will resume on Monday, December 1 after the Thanksgiving holiday!

A huge amount of economic data has come out in the last two days, most of which has been extremely positive. Yesterday's data started with the GDP. This morning you had the Chicago Purchasing Managers, which turned out to be way above estimates, at least on the manufacturing side. The employment side was a little weak, but no one seems to be too concerned with that since the weekly jobless claims (i.e., people needing employment insurance) came in better than expected. Then the Beige Book came out, which shows the economy is continuing to move along.

The interesting part about all of this is that the market kind of shrugged its shoulders after all this great data in the last two days. You have an economy that is growing at its fastest pace in 20 years, and now the employment side is kicking in. So, where is all the upside?

Well, you take these averages that have been rocketing since last March, and just maybe that's what all of this was about. Nonetheless, it's a little hard to come to the conclusion that the markets are topping out just yet. However, I have no problem coming to the conclusion that they're a bit tired and a bit exhausted, and there is a near-term topping process that has been going on throughout the month of November. Each rally in the month of November has achieved a lower high in the S&P and in Nasdaq, so we have to be concerned with that.

Just to give you a thumbnail sketch, you have the November 7 high in the E-mini S&P at 1064.50, the November 14 spike in the S&P at 1064 1/4, and today's high in the S&P at 1058.50. So we have a series of lower highs, and the declines off of those highs now become very important.

Last week's lows at 1030 and change in the E-mini S&P now become very critical lows, because they become the prior pullback support area. If those lows are taken out, then I think you have much greater case for a significant near-term top on the S&P, and the Nasdaq would also have its top as well.

For now, however, all we have for today's action is a high at1058.50 and a corresponding pivot to the downside and low at 1047