Morning Warm up - Bears are hibernating

Bears are in retreat around the world this morning as even China puts on a good performance last night.

Japan was up almost 2% while China held  to about .7% after being up over 1% but sliding a little into the close.

Across the watery divide to Europe which is continuing it Christmas rally mood.

London is a leader this morning with a 1% rally and the rest of Europe is following along. All markets are in the green as of 7:40am this morning.

Morning Econ News:

Our ES futures are up 6 pts from their 4:15pm close which is quite strong, but there is some econ news that will either throw a little cold rain or add sunshine to today's parade.

GDP will most likely stay unchanged and this finishes the 3Q GDP releases and now we start a Q1 2010 cycle.

Existing homes if they hit their 6.25M expected number (the left Colum is expectations the right column is last report's value) that will show continued improvement in the home sector.  This news comes in a half hour after the market opens and could be a buzz killer if the market rallies in the first 30 minutes.  Eyes will be on the Richmond Mfg index at 10 am also as these manufacturing indices have hit a little rough patch in the last 30 days.

Today's Chart

Correlation.  That is when one chart looks a lot like the other chart.  If one chart is going up the other is also going up.  That had been the situation for the US stock market and the EURUSD forex pair.  From the chart below we are seeing that the strong correlation that existing just last week appears to be breaking as both the US dollar and the markets are in rally mode.

The good news is that the market can rally with out a falling dollar.  The bad news is that the market now has to fundamentally perform and can not count on a dollar carry trade to boost it's prices. Economic numbers are more important the ever as we shift gears here into an economic recovery mode.

-Happy Holidays

Marlin - aka RedlionTrader