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Say one thing for DaBoyz,
they have infinite patience to wait until things turn their way, as things
nearly always do. Stocks had been grinding sideways for nearly two months,
but yesterday the prop-desk provocateurs instantly transformed the picture to
their liking, goosing the broad averages into a powerful short squeeze that
will probably keep the market buoyant for the remainder of the year. What was
most impressive about this feat is that it leveraged some employment news
that wouldn’t have elicited so much as a yawn in the good old days.
Supposedly, the private sector added 93,000 non-farm jobs in November, up
from 82,000 a month earlier. This is surely better news than we’ve
grown accustomed to, but it is not good news per se, especially considering that jobs would
have to grow at several times the current rate for nearly a decade to replace
the estimated eight million positions lost to the Great Recession.
 
Based on anecdotal
evidence, it’s hard to tell where the new jobs are coming from.
It surely is not from the professions, which, to hear it first-hand
from friends who are lawyers, Realtors and stockbrokers, remain in the
doldrums. Nor is it in the trades, although one Master Electrician we know
has been working overtime on big commercial jobs in Denver for more than a
year. In Boulder, where the economy has remained relatively strong, the
biggest area of growth seems to be, no kidding, Mexican restaurants. In
nearly every instance where a moderate to expensive restaurant has closed and
a new one taken its place, the replacement has been a tacqueria.
The only exception that springs to mind is a Ted’s Montana Grill that
opened just off Boulder’s main pedestrian thoroughfare. The steak
house, one of a chain of restaurants owned by Ted Turner, stays crowded by
offering very good burgers for $12 and a wine list with some good selections
for under $20. Another restaurant, a popular breakfast-and-brunch spot owned
by a friend of ours, is always packed with CU students, perhaps because
mimosas and bloody marys are $1. On the retail
side, there are quite a few large storefronts that are vacant, including a
cavernous one that was occupied by Borders books. But smaller spaces
seem to be about 80-90 percent occupied, and street vendors say business is
good if not great.
Paradoxical
Buyers
Concerning
the potentially lingering effects of yesterday’s short squeeze, the
rally was powerfully impulsive in that it blew past numerous old peaks on the
intraday charts. Our price targets for the Dow and the S&P 500 were
bearish at the close on Tuesday, but by the time yesterday’s session
ended, most of the targets had been invalidated. Some bears would have
covered short positions early on in the session, but there are always going
to be some risk-takers, including a handful of die-hards, who will fight the
rally for as long as possible. Paradoxically, it is these traders who will be
supplying the buying power as stocks head inexorably higher into year’s
end. It will be called the Santa Rally, of course. This pursy
metaphor, along with one that may be even worse – i.e., a “Green
[$$] Christmas” — resurfaces every
year only because newspapers are no longer paying enough to hire editorial
talent.
Rick Ackerman
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Rick Ackerman is the editor of Rick’s Picks, a
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