Morning Note - Another solid night in the States

The market backed up yesterdays solid rise with another positive session overnight with traders buying back into risk. There has certainly been more grunt in the upside move over the last 2 days than we saw in the downside moves proceeding this - which is certainly a positive. To give a brief overview of the market, we saw the USD fall away last night, (SEE CHART), Commodities were up(SEE CHART), Gold was fairly flat (SEE CHART) and looks like its trying to form the right hand shoulder of a head and shoulders pattern which is bearish if it breaks the potential neckline around $1320. We also saw Crude Oil (SEE CHART) trading at the top of its range. 

The Dow Jones Industrial Average finished up 106.63 points (0.95%) to 11,362.41. The blue-chip index has gained 3.2% in the first two days of December, its largest two-day rise since July 8. 

US stocks capped their best two-day performance since July as better-than-expected retail and home sales painted a brighter picture of the US economy. Also helping stocks, pressure on the euro eased on talk that the European Central Bank was actively buying more bonds of some of the bloc's more financially stressed governments.

This sharp rally has now turned the short term trend up although the medium term trend is still pretty muted (No clear direction). Tonight in the US we have the Non-Farm Payrolls and I'm very much looking for this number to show an improving trend of employment in the States. 

I retain my view that I stated yesterday of:  Be long the market until it breaks below critical support on the S&P/ASX 200 of 4580 to 4550 depending on your risk tolerance. 1170 is the key level on the S&P 500.  

James Gerrish 
(02) 9375 0117