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Market Preview: A Reason to Rally

NEW YORK ( TheStreet) -- Prior to Thursday's burst higher, the market had been churning a bit, drifting lower as QE3-induced euphoria dissipated and fresh worries -- the presidential election, the fiscal cliff, sorting out Europe's debt problems, take your pick -- set in.

Now, of course, the mood is a bit brighter. Spain came across with what looks like a tough budget for next year, setting the stage for its official bailout request; initial jobless claims were much better than expected; and China is reportedly primed to get into the stimulus act as well. Heck, even Research In Motion (RIMM) is in rally mode.

Even before the Dow was able to snap its four-session losing streak, Canaccord Genuity was shining a spotlight on a bullish internal indicator, noting the breadth of the broad market's advance this summer is very encouraging.

"As of September 14, 73% of NYSE issues closed above their respective 200-day moving average," the firm wrote emailed commentary early Thursday. "When this has happened since 1994, the S&P 500 tacks on an average additional gain of 12.2% prior to the next 5% correction. A move back into the support zone of 1400-1420 should be enough to work through the near-term overbought condition, be less than a 5% correction, and set the stage for the next leg higher toward 1500+."

Canaccord U.S. portfolio strategist Tony Dwyer maintained targets of 1575 and 1650 for the S&P 500 for 2012 and 2013 respectively and took some comfort in the firming of the housing market of late.

He flagged three growth areas he sees as positives, "1) Record setting corporate credit new issuance coupled with the increase in Commercial & Industrial Loan demand suggests new money is readily available to companies; 2) While the outcome of the election is somewhat uncertain, the fiscal cliff is looming and unemployment remains high, consumer confidence continues to improve; and 3) The housing market continues to show signs of growth, with single family home sales and traffic trending higher from historically depressed levels."

As for Friday's scheduled news, quarterly reports on tap include American Greetings (AM), Finish Line (FINL), and Walgreen Co. (WAG).

Walgreen is reporting its fiscal fourth-quarter results before the opening bell, and the average estimate of analysts polled by Thomson Reuters is for earnings of 56 cents a share in the August-ended three-month period on revenue of $17.14 billion.

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