Santa Claus Delivers A Relief Rally For The Ages; Largest Point Gain On Dow In Market History

The extended holiday season - thanks to an additional week for shopping between Thanksgiving and Christmas - was exceptionally kind to retailers, who reported the best holiday season in six years, so Wall Street finally got the news that the economy was apparently not on the verge of imminent collapse, sending stocks soaring throughout the session.

How much of the gains were attributable to short-covering buyers and strict momentum chasers is unknowable, though it was likely a large percentage. Risk appetites have been under assault for months, so this one-day wonder might not be as impressive as bullish traders would have one believe. It was more a technical advance after waves of selling created a severely short-term oversold condition.

To put it in perspective, the nearly five percent gain on the Dow, in point value, was equal to only about one-fifth of the most recent decline. The Dow had lost more than 5000 points since October, so Wednesday's buying spree pales in comparison and sets up the market for further speculation as far as directional trades are concerned.

If this nascent rally is to continue - which is also likely - there has to be some catalyst to carry it forward, though it might simply run until it is exhausted. Since the gains put only a minor dent in the recent losses, momentum should carry it forward, possibly another 1500-1800 points on the Dow.

While that might seem like a huge number, it wouldn't even wipe out the losses already sustained in December (as on Monday, that was -3746.36), so investors may get something of a stock sugar rush to close out the year and maybe some fun in the first days of the new year.

This pump was long overdue, and there's also the possibility that the call Treasury Secretary Mnuchin made to the Plunge Protection Team on Sunday had some impact.

Santa has come and gone, leaving plenty of presents behind.

Ho, ho, ho.

Dow Jones Industrial Average December Scorecard:

Date	Close	Gain/Loss	Cum. G/L
12/3/18	25,826.43	+287.97	+287.97
12/4/18	25,027.07	-799.36	-511.39
12/6/18	24,947.67	-79.40	-590.79
12/7/18	24,388.95	-558.72	-1149.51
12/10/18	24,423.26	+34.31	-1115.20
12/11/18	24,370.24	-53.02	-1168.22
12/12/18	24,527.27	+157.03	-1011.19
12/13/18	24,597.38	+70.11	-941.08
12/14/18	24,100.51	-496.87	-1437.95
12/17/18	23,592.98	-507.53	-1945.58
12/18/18	23,675.64	+82.66	-1862.92
12/19/18	23,323.66	-351.98	-2214.90
12/20/18	22,859.60	-464.06	-2678.96
12/21/18	22,445.37	-414.23	-3093.19
12/24/18	21,792.20	-653.17	-3746.36
12/26/18	22,878.45	+1086.25	-2660.11

At the Close, Wednesday, December 26, 2018:
Dow Jones Industrial Average: 22,878.45, +1,086.25 (+4.98%)
NASDAQ: 6,554.35, +361.44 (+5.84%)
S&P 500: 2,467.70, +116.60 (+4.96%)
NYSE Composite: 11,204.09, +434.26 (+4.03%)

Nine Days And Counting: Dow Fails To Surpass 20,000; Luck Matters

Nine trading days have come and gone since the Dow surpassed the 19,900 mark with expectations that Dow 20,000 would soon be a number we'd be looking at in collected rear view mirrors. It was also the day before the FOMC of the Fed issued their well-telegraphed, monumental 25 basis point increase to the federal funds rate (AKA, the Go F Yourself rate for savers), a marketing stroke of genius by the self-appointed rulers of all marketplaces, everywhere, forever.

Well, what happened?

In technical terms, the Fed put the kibosh on stocks. 20,000 didn't happen, just like other sure things this year, such as Hillary Clinton winning the election to become America's 45th president (love that one, just can't give it up).

Other things didn't happen over the past nine trading days (plus one weekend) that were not nearly as important. Donald Trump didn't resign before taking the oath of office (sorry to the serially constipated never-Trumpers like Bill Kristol), nobody killed any special lions or panda bears, and no enormous meteors struck the earth ending the human species (really happy about that last one).

But, a few days ago (Wednesday, Dec. 21), Fearless Rick made possibly the most outrageous prediction of his inglorious career as writer, journalist, blogger and general miscreant. He touted his belief that the Dow would not break the 20,000 mark this year or at least until June, 2017. He mused that the Dow "may" not hit 20,000 until 2023.

Here's his exact quote:

The Dow isn't going to make it to 20,000 this year, and it won't make it by June of next year. In fact, it may not hit 20,000 until 2023. Book it.

So far he's right. But there's still five trading days left in 2016, so plenty of people are rooting against him, including some fat guy in a weird red suit promising some absurd thing known as a Santa Claus Rally. Good luck with that. Far fewer are betting against him, however, as the market in general, and the Dow in particular, seems to have peaked.

There's still plenty of time for him to be wrong. There's the six months until June, and the seven years until 2023. But, since one and seven are Fearless Rick's lucky numbers, he may eventually to be more lucky than good.

We shall see. In case one missed all the non-action of Friday's market churning, it went something like this: Down, slightly, sleepwalking though midday, rabid short-covering into the closing last ten minutes, boosting all the major indices into positive territory. We have all seen this play before. Yawn, and Merry Christmas.

At the Close, Friday, December 23, 2016:
Dow: 19,933.81, +14.93 (0.07%)
NASDAQ: 5,462.69, +15.27 (0.28%)
S&P 500: 2,263.79, +2.83 (0.13%)
NYSE Composite: 11,128.80, +14.66 (0.13%)

For the week:
Dow: +90.40 (+0.46%)
NASDAQ: +25.53 (+0.47%)
S&P 500: +5.72 (+0.25%)
NYSE Composite: +3.58 (+0.03%)

Market Week In Review: December 10-16, 2016; Stocks Moribund, Silver Slammed, Oil, Banks Up

Highlighted by Wednesday's (Dec. 14) FOMC rate policy announcement, the week as a whole saw its fair share of ups and downs, mostly confined to intra-day movement, but eventually ending mildly positive, at least for stocks.

The Dow recorded a pair of all-time closing highs on Monday and Tuesday, but failed to reach for the stars after the Fed announced a 0.25% hike in the federal funds rate, the first in exactly one year. The move from 0.25-0.50 to 0.50-0.75 triggered a sharp sell-off in Wednesday afternoon trading, though stocks recovered nicely on Thursday and ended flat on Friday.

If the week was uneventful for stocks, it was not the same for commodities, particularly silver and gold, or for the US dollar, which reached nearly-unprecedented highs over 102.20 on the Bloomberg dollar index. As the dollar gained, the precious metals were slammed, gold losing over $30 top to bottom, but eventually leveling off at $1134.60 at Friday's finish, a loss of just $26 from the rate announcement. Silver took a much harder hit, dropping in price on the COMEX from $17.10 an ounce on Wednesday to end the week about a buck lower, at $16.07, a six percent loss.

Following OPEC's announced production cuts for 2017, crude spiked over $55 per ounce, but retreated during the week, still ahead somewhat at 53.03 as the week's trading closed out. Despite the strong dollar - supposedly a brake on oil prices - oil managed to ramp up to the highest price in three years.

Financials and industrials led the way for US stocks, not surprisingly continuing the Dow rally spurred forward by notables Goldman Sachs, 3M, Boeing, and General Electric. The Dow Industrial Average being the only major index to finish in the green for the week, markets continue to show strength in only the largest of large caps while smaller stocks are only being nibbled upon and, in the main, sold. The fracturing of markets into large leaders and small losers cannot bode well for the continuation of any meaningful rally going forward.

Naturally, with the Fed hiking rates, if only modestly, Treasuries were sold, but mainly on the short-duration issues. The five-year note broke through the mythical 2.00% threshold this week (2.05%), while the 10-year popped briefly above 2.60%, clinging close to that level as markets went dark for the weekend (2.57%). A flattening yield curve was evident as the 30-year bond remained steady, at 3.16%, pushing down the spread between fives and thirties to a unitary 1.11%.

All of this came against a backdrop of national news media hyping futile and largely-baseless claims by the US intelligence community that Russia hacked the 2016 presidential election, somehow making Vladimir Putin responsible for the election of Donald J. Trump (who will be formally elected by the Electoral College on Monday) and the demise of Hillary Clinton, the choice of the much-discredited leftist status quo.

The folly of the intelligence claims was completely ignored by Wall Street, and rightly so. The last thing investors need is a fresh injection of political skullduggery, after slogging through nearly two years of endless campaign rhetoric from all sides.

With a week left before Christmas, retailers have yet to ring bells of any kind, neither of alarm or of joyous peals f profit. The Christmas shopping experience over the past decade has morphed from mad dashes on Black Friday to a controlled button-pushing event on computers nationwide, as the internet has revolutionized the retail buying experience and forever changed the shopping mall landscape and holiday experience.

With two weeks remaining in 2016, it's likely that markets will respond to calmer views going forward though a sharp Santa Claus rally, taking the Dow beyond 20,000, is a distinct possibility over the final ten trading days of the year.

At The Close: Friday, December 16
Dow: 19,848.60, -3.64 (-0.02%)
NASDAQ: 5,437.29, -19.56 (-0.36%)
S&P 500: 2,258.20, -3.83 (-0.17%)
NYSE Composite: 11,122.44, -9.46 (-0.08%)

For the Week:
Dow: +86.65 (0.44%)
NASDAQ: -7.34 (-0.13%)
S&P 500: -1.46 (-0.06%)
NYSE Composite: -66.57 (-0.59%)

Big Week for Stocks Ends on High Volume, 4.1% GDP

If stocks needed a little more of a boost after the Fed's taper-lite effort earlier in the week, the BLS gave it to them early Friday morning, when it announced the final revision to third quarter GDP at a whopping 4.1%, which turned out to be a solid increase over the already rosy 2.8% first estimate and 3.6% second estimate.

Thus, all the indices turned in a solid performance for the week, among the best of the year. The Dow had its third-best week of the year, and it has been a year of outsize gains overall and generally superior performance for equities when compared to all other asset classes.

Maybe the general economy is not exactly where everyone would like it to be, but it appears to be close enough for Wall Street, as trading winds down to just six trading days remaining in 2013.

For the week, the Dow was a moon-shot, gaining 465.78 points for a 2.96% rise; the NASDAQ tacked on 103.77 (2.59%); the S&P added 42.99 points (2.42%).

Record highs at the close on Friday were recorded for the Dow, S&P, Dow Transports and the Russell 2000.

Due to quadruple witching in options and futures, NASDAQ and S&P rebalancing, and a Fed-infused dose of holiday cheer, volume hit its best level of the year.

Bonds were well-behaved, with the benchmark 10-year note finishing at a modest 2.91% yield.

Everything looked so good, even gold and silver caught some bids.

The old song says, "Santa Claus is Coming to Town," though it appears the jolly fat man made Wall Street an early destination.

DOW 16,221.14, +42.06 (+0.26%)
NASDAQ 4,104.74, +46.61 (+1.15%)
S&P 1,818.31, +8.71 (+0.48%)
10-Yr Note 98.65, +0.50 (+0.51%) Yield: 2.91%
NASDAQ Volume 2.93 Bil
NYSE Volume 4.90 Bil
Combined NYSE & NASDAQ Advance - Decline: 4247-1527
Combined NYSE & NASDAQ New highs - New lows: 505-63
WTI crude oil: 99.32, +0.28
Gold: 1,203.70, +10.10
Silver: 19.45, +0.267
Corn: 433.25, +2.75

St. Nick Drops in on Wall Street

As expected, the jolly old Santa Claus Rally began today with modest gains in a shortened session. Stocks posted gains right from the opening bell, with little inducement to sell shares.

Dow 10,520.10, +53.66 (0.51%)
Nasdaq 2,285.69, +16.05 (0.71%)
S&P 500 1,126.48, +5.89 (0.53%)
NYSE Composite 7,255.00, +37.80 (0.52%)

Advancers beat decliners, 4288-1962. There were 663 new highs and just 66 new lows. Volume was extremely thin.

NYSE Volume 1,413,204,625
Nasdaq Volume 631,728,687

Oil gained 43 cents, closing at $77.10. Gold was up $10.80, to $1,104.80. Silver finished 25 cents higher, at $17.44.

Everybody left happy.

Merry Christmas

Santa's Coming; Equities Continue to Rally

There was a little less enthusiasm for stocks after the University of Michigan announced that consumer sentiment fell in December, to a reading of 72.5 from November's 73.4, and National Association of Realtors (NAR) reported that new home sales fell by 11.3% in November, to a seasonally-adjusted annual rate of 355,000 units. The drop from the same period a year ago was 9%, due to uncertainty over the new home buyer tax credit, which was extended by congress, but not in time to cause a slowdown as many buyers walked away from possible deals. Also adding to homebuilders' woes are the crush of foreclosure properties on the market, which are driving down real estate prices overall and provide a tempting alternative to purchasing a new home for tens of thousands of dollars more.

Builders have not recovered from the housing meltdown of the past three years running, with the number of new homes on the market down to levels not seen since 1971.

Those two bits of economic reality - released at 9:55 and 10:00 am, respectively - sent stocks backwards. The Dow went from its high of the day just moments after the open, to the low of the day shortly before 10:30 am, and traded in a narrow, 35 point range the remainder of the session.

All of the major indices recorded smallish gains, with the NASDAQ leading again and making new multi-month highs, as did the S&P 500.

Dow 10,466.44 1.51 (0.01%)
NASDAQ 2,269.64 16.97 (0.75%)
S&P 500 1,120.59 2.57 (0.23%)
NYSE Compos 7,217.20 33.02 (0.46%)

Trading was extremely light and listless, without much enthusiasm except on the NASDAQ, which continues to spark rallys. Advancing issues outpaced decliners handily, 4580-1913, and there were 679 new highs as compared to just 81 new lows, though you wouldn't expect those kinds of numbers given the tiny gains on the day. There's quite a bit of nibbling going on, mostly from day-traders and high-frequency types, but the market continues to grind forward on the expectation of a Santa Claus rally, usually defined as the final five trading days of the year, plus the first two of the following. That would put markets right on the cusp of one final push into the new year, despite stocks trading at elevated levels.

NYSE Volume 3,585,565,750
NASDAQ Volume 1,606,121,000

The dollar weakened today, taking a break from its month-long rise against the other currencies of the world, and, right on cue, commodities rallied. Oil, which was also boosted by a significant draw-down in US oil stock, rallied $2.27, to $76.67. Gold gained $7.80, to $1,094.50, temporarily breaking off its very own deep, recent slide. Silver added 15 cents to close at $17.18 per ounce.

Markets will be open only a half day on Thursday and closed Friday in observance of the holiday.

I'll be reporting sometime after 1:00 pm on the short session, wishing all a very Merry Christmas. It's been a remarkable year and my pleasure to report on it.