(By Rich Bieglmeier) Hey, hey stocks turn green for a big day to start Thanksgiving week. The Dow picked up 1.65%, the S&P 1.99% and the NASDAQ 2.21%. The thrust higher was compliments of rumored niceties between Republicans and the White House regarding the fiscal cliff. Trimming $400 million a year for the next 10 years will keep the debt from ballooning to $26 trillion. No, instead it will be $22 trillion – give or take a trillion or so depending on GDP growth.
The whiff of bipartisanship couldn't have come at a better time as Europe has double-dipped and debt negotiations are getting testy. The EU could fall back to the "she loves me not peddle" and roil stocks, again.
It will be important for stocks to have a follow through day today. The momentum model iStock follows shows the short, medium, and long-term needles pointing up; however, Tuesday/Wednesday could be make or break days for any continued ride higher.
[Related -Is The Slump In US Manufacturing Easing?]
All three levels of momentum are pressed against their respective upper trend-lines which connect recent pivot tops. If MO can move on through resistance, then we can see the NASDAQ making its way towards 2,950ish, the Dow 13,000ish, and the S&P 1,400ish.
Ben Bernanke could help the equity markets reach technical targets when he speaks later today at the Economic Club of New York. After his speech, the Chairman will take questions for 20 minutes or so, and his answers could give traders the juice they need or a punch in the gut.
We suspect Ben will follow Tim Geithner's suggestion that the debt ceiling limit should just be eliminated. We can see Bernanke hinting at further Fed action in light of last week's Jobless Claims. A few more Jobless Claims of more than 400,000 and an uptick in unemployment could have the Federal Reserve turn the digital-dollar spigot wide-open. Unlimited debt and dollars, what could go wrong with that?
[Related -Market Potentially Facing Near Term Technical Headwinds]
If Geithner and Bernanke can keep stocks rolling today, iStock sees Industrial Engineering, Specialty Retail and Footwear as sectors that could be hot. On the flipside, Telecom and Software look icky; investors might consider avoiding both in the next few weeks. Come back later today to see our full list of bullish and bearish sectors.