Excuse the reference to a decade plus old advertising campaign from days when consumer spending was at such an ebullient level Madison Avenue was bold enough to suggest giving your special someone a luxury automobile for the holidays.
It’s the raw “Action” in the market to start the month that should grab investors attention and possibly even dissuade aggressive Hedge Fund traders from their typical practice of closing their books and “calling it a year” by the middle of the month.
Four days into the month we’ve had 4 consecutive 1% moves in the broad market averages, each larger than the day before. Thursday’s sell off and Fridays reversal was stunning. Friday, we were particularly struck by the uniformity of the rally with the DJIA, S&P 500 and NASDAQ all gaining +2.1%.
This was a viscous “In Your Face” rebuke to Thursdays sellers that were shaken out by the largest 1 day rally in the EUR/$$ since March 2009 and the largest 1 day sell off in US Treasuries in over 2 years.
The DJIA; at 17,847, S&P 500; at 2091.70 and NASDAQ; at 5142 all have the look of setting up for a final run at fresh all time highs before the end of the year/month. Going into Thursday’s short lived route, there were 20 trading days left in 2015. The S&P 500 has a posted positive gains during the last 20 trading days of the year for 12 consecutive years!!
To say that this is a Market Friendly time of year is putting it lightly.
This year end has not been without its challenges.
No doubt there have been major hurdles facing the market in the fourth quarter.
Earnings and revenues have been underwhelming for 3 quarters running, and that’s unlikely to turn on a dime when Q4 reports come in next month.
Significant technical damage was done to the broad market averages during the August lows and September retest of those lows. This included capitulation style price action in the natural resource, emerging markets and marginal oil and energy names.
Uncertainty over timing of the FED’s initial interest rate hike has weighed on the markets since the spring. Most Real Pros are tired of hearing about it and anxious to get the inevitable 1st rate hike behind us if for no other reason than to see how the market finally takes it.
Oil prices are at their lows of the year, and for the last 2 weeks we’ve been seeing what looks like round 2 of a massive portfolio flush of secondary and tertiary oil names to “just get them off the books” going into 2016.
The market has steadily worked through everything thrown at it. Possibly the most significant is that the broad market has managed to diverge to the positive from the direction of Oil and most Oil stocks. Until recently this has been a battle that stocks have been unable to win.
December to Remember for Stock Traders?
While December has a great track record of positive monthly gains, it’s usually with little fanfare and exuberance. Very seldom do we find the market at a major inflection point post Thanksgiving (1999 being the most obvious exception) but it feels very much like that’s exactly where we are right now.