The stock markets opened up strongly this morning and steadily rose to close near their highs of the day. SPX rose $36 to close at $1241 and RUT tacked on $30 to close at $738. The talking heads cited the favorable Spanish bond auction and the favorable housing starts data for this rally. Housing starts for November came in at 685k, up from last month's 627k. Building permits also rose to 681k from the previous month's 644k. These are good signs, but hardly extraordinary. If this is the long awaited Santa Claus rally, it would be expected to continue into the new year, but that would be surprising behavior for this market. Maintaining an upward or a downward trend for more than two or three trading sessions has been unusual this year. The European debt crisis is far from resolved and while our own economy is showing signs of recovery, it is a very slow recovery at best. So I have to conclude that this rally will last only until the next negative news item comes out of Europe.

Trading volume spiked up today with 3.1 billion shares of the S&P 500 stocks trading, although this is slightly below the 50 day moving average at 3.2B. Trading on the NYSE rose 7% and volume increased 14% on NASDAQ.

Well, let's see what Santa brings us for the balance of the week...