Is this my Santa Claus Rally?
Where is my Santa Claus Rally? I want to know. Its all discussed endlessly this year. Today the market broke out from its strong Flag like pattern formed since December 5, 2011. Take a look here. We talked about it last night in the daily video.
The market tried to rally last week and ended up fizzling out. There barely 10 days left for the stock market to show up with a Santa Claus rally or may be it wont be this year. There is still time and if we have any good news from Europe it would catapult the SPX higher. The rally would be on lower volumes if it comes there will be lesser and lesser people to participate.
Biggest factor keeping the market down is Euro zone debt crisis and lack of confidence that ultimately these things will work out. Every time a German official open his mouth the market drops hundred points. Its purely headline driven market for this month.
Though things are looking on the mend on the US economy with declining unemployment claims and spurred manufacturing activity, its highly overshadowed by the European headlines. “There do appear to be some improving economic indicators domestically, but it’s hard to see how they win the day if Europe continues to be a big concern. It’s not like the valuations are at such bargain-basement prices that it becomes a one-way bet,” said Stephen Massocca of Wedbush Morgan in San Francisco.
The chances of Santa Claus rally are out there but it may recede if we don’t see assets managers pushing the market higher by the last week of December. The S&P will end up being down 3 percent for the year. There is a huge amount or money sitting on the sidelines waiting for the cue. The money would pour into US equities if there is a clear cut signal.
I am going to keep my fingers crossed, and lets see if Santa Claus is out there and I hear the sounds of ho ho and green on my screens…
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