Market Preview: Staving Off the Grinch

Updated from 8:02 p.m ET to include information on Wednesday's after-hours movers.

NEW YORK (TheStreet) -- Considering the selling pressure brought on by the Oracle(ORCL) debacle and the temptation for investors to book some profits on Tuesday's massive gain, the stock market held up pretty well on Wednesday.

It was Big Blue that really put a damper on the blue chips. Remove the impact of IBM's(IBM) 3% decline (43.67 points) from the equation, and the Dow Jones Jones Industrial Average would have been up almost 50 points. That would have qualified as a nice follow-through after a gangbusters day, low volumes or not.

Now, with no more market-moving earnings reports through the end of the year, U.S. economic data and Europe's headlines will decide whether stocks have one more big spike higher left in the tank before 2011 draws to a close.

The charts could also be a factor as S&P Capital IQ said late Wednesday the technicals look promising for a strong finish to the year.

"We believe the stock market is poised for continued strength through the rest of 2011 and into 2012," the firm said. "The major indices have now traced out a higher low, but need to post a higher high for confirmation that the recent consolidation is complete from a bullish perspective."

S&P Capital IQ has a 12-month target of 1400 for the S&P 500, implying potential upside of 11% from Wednesday's close at 1244, and says the next key area for the index is around 1260.

"We think a strong break above 1,260 would confirm the uptrend and open the door for a strong rally up to the next major area of strong chart resistance between 1,350 and 1,370 some time in the first quarter of 2012," the firm wrote.

Meantime, a third straight drop in weekly initial jobless claims on Thursday would go a long way toward staving off an appearance by the Grinch. According to Briefing.com, the consensus estimate is calling for a bump back up to 388,000 from last week's shocker of 366,000, the lowest level in more than three and a half years.

Ian Shepherdson, chief U.S. economist at High Frequency Economics, is expecting a rise to 390,000 because claims "rarely move smoothly even when the underlying trend is very strong," but he's also optimistic that the employment picture is improving and went on to note that "a third straight drop in today's report would be very startling and would add weight to the idea that something real is happening in the labor market."