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Morning Matters:

Weekly Playbook Update
by Geoff Garbacz

1.Continue to watch the impact of bankruptcies and mergers on the market. Acquisitions are happening every week and there have been no bankruptcies.Updated.

2.Unemployment numbers are due each Thursday and continue to slow bit by bit. Monthly numbers are not due again until February. Updated.

3.Data shows that the economy is starting to bottom albeit at a moderate pace. Consumer confidence has not rebounded and must be watched. Numbers of note this week include retail sales,CPI and industrial production. Updated.

4.Energy prices are range bound which a plus for stocks as taking less money out of the consumers pocket. Energy struggling a bit here as of late as the dollar has been in rally mode for a few weeks. However, gasoline prices are higher by 15 cents. Updated.

5.The Dow Jones is now above 10500. Can 10500 become support? The S&P 500 moves back above 1100 this morning while the NASDAQ Composite is above 2200 and pushing for 2300 to become support. Updated.

6. The big question earlier this year was, "Can the S&P 500 take out its January high of 943.85?" Then we asked can the 38% retracement from the October 2007 high to the March 2009 low, 1014.14 be take out. Currently, this level has been successfully conquered. The next level recently taken out was 1121.44 which is the 50% retracement and now support. Updated.

7.Erlanger's EBB remains above 0. Weekly and monthly EBBs are positive. For daily readings we suggest you go to www.erlangerchartroom.com for hourly updates. Updated.

8. December was another positive month for the S&P 500 and the Dow Jones Industrial Average. The only month that the market has struggled since March has been October. January is higher so far. Updated.

9.Semis and the SMH broke above $27 but has been unable to hold above $28. As semis go, so goes the market. We need to see a breakout above $28. Intel (INTC) earnings due on Thursday after the close. Updated.

10. Also as transports go, so goes the market according to Dow Theory. Transports remain strong. IYT is holding above $75. This is a plus for stocks. Updated.

11.We are adding a new measure. How small cap names are doing against large cap. Small cap names have broken out since mid October and this is no longer a concern.

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