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Is Santa Claus Rally Almost Done?
Edward Krudy of Reuters reports, Is Santa Claus rally almost done?:
The Investors But "The Rueckert said "A lot of stocks this When trading Inflation data BULLS IN THE EGGNOG Some see signs of the bulls getting into the eggnog. The American Association of Individual Investors' latest sentiment survey That is often seen as a contrarian indicator. This But gains have "We
"I don't think we're That The In addition, the 3-day moving The Chart-minded "When The 1,120 level, the top of a recent trading range, is seen as strong support. On Friday, the S&P 500 closed at 1,240.40 and was up 1.3 percent for the week. The Dow Jones industrial average .DJI LOOK OUT FOR FED HAWKS An If The "The I Why do I believe that QE 2.0 is not the end of it? Two reasons. First, policy remains reflate and inflate at all cost. The I quote Michael Hudson, economist:
December rally may be reaching its climax, with just two weeks to go
before Santa Claus makes his midnight run. Dwindling volume, excess
optimism, and history all point to a stock market that could be running
out of steam.
appear to have grown complacent as the CBOE Volatility Index, or VIX
.VIX, has fallen to levels not seen since April. Stocks have made new
highs on almost a daily basis. The S&P 500 .SPX closed on Friday at its highest level since September 2008 and the Nasdaq .IXIC scored its best finish since late December 2007, with many expecting gains to run through the end of the year.
Cleveland Rueckert, an analyst at Birinyi Associates in Stamford,
Connecticut, believes the year-end rally may be largely done.
majority of that gain may already have occurred," he said. "Most
people are more likely to be closing out their books at the end of the
month and looking for opportunities to open new positions at the start
of the next month."
that over the last 65 years, when the S&P 500 has rallied at year's
end, the average gain has been 3.4 percent between Thanksgiving and
New Year's. So far, the index has risen 3.5 percent since the start of
the period.
year have had very big gains and it really wouldn't be surprising to
see a lot of the managers close out positions and take some vacation
time," he said.
resumes on Monday, that will start the last five-day trading week
before Christmas. The following week will be cut short by the holiday.
With December 25th falling on Saturday this year, the U.S. stock market
will be closed on Friday, December 24th, in observance of the
Christmas holiday.
for November will dominate next week's economic calendar, with the U.S.
Producer Price Index due on Tuesday and the U.S. Consumer Price Index
set for Wednesday.
shows bullish sentiment reached a four-week high. What's more, bullish
sentiment has spent 14 weeks above its historical average -- its
longest streak in six years.
week, the S&P 500 has broken through closely watched resistance
levels and has climbed for six of the last eight days to close at fresh
two-year highs.
been accompanied by decreasing participation. Average volume during the
last three days of the week was 7.76 billion, well below this year's
daily average of 8.62 billion.
are entering now the beginning of the seasonal pattern where volume
really dries up," said Nicholas Colas, chief market strategist at the
ConvergEx Group in New York. "It seems like it's starting a little
sooner than usual.
at any risk of a meaningful sell-off into the end of the year, but I
think the basic contours of what the economy looks like are pretty well
set," he said.
sentiment was reflected in the VIX, also known as Wall Street's
favorite barometer of investor fear. Although the VIX edged up on
Friday, the index has fallen for six of the last nine sessions. It now
stands at 17.61 after hitting its lowest since April.
15-day moving average of the advance/decline ratio on the New York
Stock Exchange, a measure of the proportion of advancing to falling
stocks, has started to slip and currently stands at around 1.5. It
peaked this year in July at about double that, according to Reuters
data.
average of stocks making new 52-week highs has also turned lower after
a spurt at the start of the month. It now stands at around 125, down
from more than 250 at the start of the month.
breadth and ratios have not been "on board" this rally of late,
according to a report from McMillan Analysis Corp. Equity-only put-call
ratios remain on "sell" signals, the analysts say.
investors are bullish. The S&P 500 has closed well above 1,228,
the 61.8 percent Fibonacci retracement of the 2007-2009 bear market
slide, a key technical level.
a market surpasses a certain retracement level, then the probability
increases of a rise to the next retracement level, which in this case
would be a 76.4 percent retracement and that's a ways up at 1,362," said
Chris Burba, short-term market technician at Standard & Poor's.
ended Friday's session at 11,410.32 and was up just 0.2 percent for
the week. The Nasdaq closed on Friday at 2,637.54; for the week, the
Nasdaq was up 1.8 percent.
agreement to extend the Bush-era tax cuts over the next two years has
started to seem like less of a done deal. The agreement is expected to
be approved by the U.S. Senate on Tuesday, but could face a tougher
road to passage in the House.
the legislation stalls, resulting in higher capital gains and dividend
taxes at the start of next year, then U.S. stock prices could fall.
Federal Reserve's policy-making body, the Federal Open Markets
Committee, will convene on Tuesday for its last meeting of the year. The
recent clutch of stronger economic data could spark a debate over how
far to stretch the central bank's $600 billion stimulus plan, designed
to keep interest rate low through bond purchases.
hawkish members on the Fed may seize on this cluster of strong numbers
and use them to support the argument against" quantitative easing,
said Pierre Ellis, senior global economist at Decision Economics in New
York.
used to analyze all these technical indicators to death. No more. I
don't care how low the VIX is, it could go lower and stay there for a
long time. I believe that institutional and retail
investors should continue buying any dip that comes their way. Look at
November. Everybody thought Europe was going to collapse. Admittedly,
the Irish bailout is not a done deal, and Europe is a mess, but the fact
remains that there are powerful interests that want to see this rally
continue as long as possible.
The Fed and other central bankers will accommodate the global financial
system, providing banks with cheap funds to buy bonds, making an
instant profit which they use to buy higher-yielding risks assets all
around the world. This will shore up bank balance sheets and hopefully
trickle to retail investors who desperately need a wealth effect (but
wealth effect from stocks is much weaker than the one from real estate).
second and more important reason why I believe QE is here to stay is
that the US economy is still at risk for experiencing debt deflation. I
want all of my readers to carefully read Part 3 of an interview posted
on Huffington Post between Michael Hudson the report, and Michael Hudson
the economist. Part 3 is available here (and you can read Part 1 of "My Talk With Michael Hudson" here and Part 2 here.)
The
constraint on this Ponzi scheme was the ability of income to carry the
rising debt. As long as interest rates were falling, a given rental
revenue or equivalent homeowners' value could carry a rising debt. But
once interest rates reached their minimum, by 2006, there was no more
leeway left. Homeowners had to pay debts out of their take-home wages,
which have not risen in real terms for over thirty years now. The debt
charade no longer could be concealed.
This leaves us with the
problem of where we go from here. The Obama Administration's "solution"
is for the economy to "borrow its way out of debt." The Fed is
flooding the economy with credit to get the banks lending again - in
the hope that new mortgage lending will restore high prices (that is,
high housing costs to new buyers), saving the banks' balance sheets.
But
with much of US real estate already in negative equity, banks are not
going to start lending again on a large scale. The government doesn't
want to confront the fact that we have entered a period of debt
deflation. When debtors pay their creditors, they have less to spend on
goods and services. So market demand shrinks, corporate profits fall,
investment declines and unemployment rises.
To mainstream
economists, this is an anomaly. This shows the extent to which
creditor-friendly views have swamped common sense in academic economics
as well as in Congress. It reflects the power of financial lobbyists
to persuade many policymakers to embrace illusion over reality.
I
don't agree with Michael that we've entered debt deflation (at least
not yet), and corporate profits are rising, not falling. And while I do
agree with him on creditor-friendly views swamping common sense in
academic economics, I also know that the financial oligarchs and their
powerful lobbies have a stranglehold on the economy. They get first
dibs, and if there are any crumbs left over, then they'll lend to small
and medium sized enterprises (SMEs). The big banks don't care about
lending to SMEs. They care about profits, which is why they continue
trading aggressively in their capital markets operations. It's liquid
and pretty easy for them to lock in spreads and trade high-yielding risk
assets.
What does this have to do with the Santa Claus rally?
In the short-run, nobody knows how stocks will react. Over on Zero
Hedge, RobotTrader posted a link to Investor's Business Daily Top 100 list.
Should you rush out to buy Priceline (PCLN) at $400+? It could go
higher but the time to have bought PCLN and a bunch of other gems was
back in January/ February 2009 when I wrote about post-deleveraging blues and recommended a few of them.
The
great thing about the stock market is there is always an opportunity,
especially when you have a tsunami of liquidity out there looking for
yield. Don't get too caught up in all these technical indicators or in
the negative macro news environment. At the end of the day, the powers
that be will keep buying the dips because it's all part of the master
plan to avoid debt deflation at any cost.
Will it work? That remains to be seen. If you read Hoisington's interim quarterly update, the US economy is still in a growth recession and monetary policy is ineffective. I quote the following:
Commodity
loans can be financed at 1% or less. This encourages speculative buying
of commodities for inventory, thereby causing food and fuel price
increases. For household's of average means, funds for discretionary purchases are quickly drained.
This is especially evident since the pump price is now at or above $3 a
gallon. A 30-year mortgage rate approaching 5% only serves to
accelerate the downward pressure on home prices - the main source of
household wealth. In short, higher stock and commodity prices are not a
net gain in current circumstances.
So when we
speak of Santa Claus rally, we should qualify it. It's great for the
financial elite making millions in bonuses, but for the average
household struggling to get by, it means absolutely nothing, especially
if the economy keeps hemorrhaging jobs or creates insufficient job
gains. We are not out of the woods, especially on the economy, but
something tells me the stock market will continue climbing the wall of
worry, much like it did back in 2004.
»
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Leo-
I despise your submission. I don't want to believe anything you say. I want a financial apocalypse to wash over the US. I feel financially raped and emotionally exhausted.
I started reading ZH because it agreed with how I want the financial devastation to happen. Now, my faith is wavering. There is no changing the TBTF model until there is an uprising... but there will not be an uprising.
All the peasants are happy and fat. American Idol appeases the masses who have unwittingly adopted corruption. Nothing to see here, so please move along. JPM silver short? Don’t worry, it’ll be covered. There is no threat; the market will move forward. Acclimate or be left behind because there is nothing that can be done.
The economy might fumble along for a while, but it’ll be fine. The revolt is finished. Without action, there is no revolt. Buy the dips and love thy master. As much as I want to point to the faults in your argument, there are no faults.
Be careful for what you wish for. The electronically lobotimized population of the US will not revolt but they are starting to wake up and smell the coffee (see Tyler's post with Bloomberg poll showing majority of Americans are in favor of banning or taxing WS bonuses).
They smell the coffee, and they realize it's poisoned. The only problem is that they still drink the coffee, then fall back to sleep.
The Bloomberg poll shows that people are disgusted with WS. But where does that go? Will things change? I don't think so. The public will be appeased, the financial trauma will pass and a new, glittery headline garner attention.
Almost 0% chance of a sell-off before the end of the year. Way too easy for MMs to paint the tape on thin volume. It's a perennial holiday event. And I don't believe in any bifurcation in the PM and equity markets - asset inflation is asset inflation a la Bernank bucks.
I love it when Robot, leo, smelly smailes, or whatever, get everybody going. I love a good junkfest, but what I like most of all is to trade. I use this site and other sites to make money. I don't understand refusing to invest in a way that attempts to maximize your returns. Maybe I'll be wrong for going long now and shorting silver and gold. But it's not a moral issue with me. Look the whole system is more or less corrupt, but it's not nearly as bad as some of the third world shitholes I have visited. If you let your anger and rightousness muddle your head you won't make a good trader or investor. I don't think Leo supports the system. Traders just look at the issues and place their bets. Wanking on this site and junking people is fun, but it doesn't make you any money. Maybe those of you who have been 100 percent long silver since 1999 are going to be the new kings in the apocalypse, but you will more likely ride the elevator down and refuse to sell at the right time, because the right time will look so wrong. I'm here to make money, not to rant about what I can't change.
BD, it is one thing to discuss or advocate the possible advantages of trading within a corrupt and manipulated market, and I have relatively few bones to pick with those who do.
It is altogether a different, and morally repugnant, matter to DEFEND those corrupt and manipulated markets, and those who corrupt and manipulate them (and us), as Leo does and has done over and over in this forum. THAT is the kind of cowardice and moral surrender that I find utterly despicable and abominable.
akaka,
Listen up. I'm not defending the banksters or the system. I just accept it for what it is: corrupt, manipulated, etc. You can't do anything about it. So try to make some money within the insitutional confines and stop moralizing and spewing garbage.
No, Leo, you HAVE defended the banksters and their system in this forum, more times than I can count --- and it was doing that that got you junked into oblivion over and over again. You routinely mock if not attack anyone who even suggests that the current financial and monetary systems even NEED to be fundamentally restructured, much less who actually propose reforming or changing them. Do not try to lie here --- too many of us know your attitudes and beliefs regarding the status-quo power structure by now.
In almost every post, you have demonstrated, and argued for, a short-sighted and cowardly submission to the powers-that-be, and have routinely denigrated anyone who dared suggest that anything meaningful be done or even attempted toward restraining or reining-in the corrupt and out of control elites. "They own you!" is one of your favorite lines --- and you seem perfectly fine with that. Virtually every one of your posts advocates not just working within a corrupt (and unsustainably corrupt) system, but acquiescence and perpetual submission to that system. That is why I find you reprehensible.
And that is why there has NEVER been a revolution or political reform movement of any kind throughout history ---and why we are still ruled today by absolute monarchs.
(/sarcasm)
Are you going to lead the next revolution? BWAHAHAHAHA!!! Thanks for the laugh...good night!!!!
Spoken like the true power-worshipping, statist Canadian that you are.
However, I fail to find where I ever made or inferred any such personal claim, you intellectually and spiritually crippled asswipe.
Whoever will lead the next revolution, we know who it will NOT be, and his initials are LK. But I have absolutely no doubt that you will be a loyal Tory in opposition to it, defending the status-quo to the last.
Why are you such a coward and a power-panderer, Leo?
It amazes me that Tyler leaves you on here. Will tell him that I would like to kick you off since your relentless insults prove you have no place whatsoever here.
Yes, go cry an ocean of tears to Tyler, you emotionally and morally stunted crybaby. You may just find that is it YOU who gets booted from here, as you have been deserving for quite some time now.
Care to wager on that? You are so pathetic, but really, from now on, you simply do not exist and will be ignored.
At this point, I am actually embarrassed FOR you, Leo --- if you could only realize how childish, shallow and petulant you come across in your rantings, you would slink away in shame forever.
ok let me clarify. I come here to make money, but I stay for the junkfests!
If Wikileaks reveals a bank of 'Mark to Model' then we may have a cold Christmas!
The Ralley has been a Santa Claus Ralley since its inception. Nothing but old saint Bernanke giving the gift of bailouts to all his little Wall St. children. There is no correlation to anything other than how much more money in the hole he is willing to go. When the money is gone and we have another crisis, Saint Bernanke will have nothing left for all his who have whores in whoville.
Well, I guess we'll never have problems again - we'll just print away whatever comes up. Your piece is well written but wreaks of assumptions made in a vacuum. The doom and gloomers do the same thing - but, here's your problem. Cyclical tailwinds (diminishing) into structural headwinds (growing). You speak of the market as if it is untethered to any reality. Lets not debate the elastic/inelastic thing - but the cold hard truth that the truth can run but not hide....fundamentals matter. If they don't, do you honestly see a future of printing as a solution to anything. Any child will tell you after filling their diaper the first fifteen minutes ain't so bad - then it gets sorta uncomfortable.
The market does look overextended here. But it should be hitting DJIA 12,300 (possibly after a correction from current levels), as the extended tax cuts stimulate the economy,
time123
http://invetrics.com
Sure Leo, but "The Fed and other central bankers will accommodate the global financial system" infers that they can infinitely turn water into wine, the one loaf of bread into 1000, or however the story goes.
I agree governments & their banking arm will accomodate but they are not gods, they rely on the monetary quality of the government bond, which is already beyond all reasonable bounds, so in the words of Doug Noland, it may yet double. Nevertheless, they are not gods.
I am glad to see more and more posters (and presumably readers) here seeing through the pro-establishment, "go with the flow", intellectually and morally bankrupt permabullshit of Leo.
akak,
You and the rest of the "sky is falling crowd" here are going to bend over and grab your ankles. Lube up, it's going to hurt, and don't say I didn't warn you!!!
Leo,
It already hurts, taking it long and hard from the Bernank and his Wall Street and Washington gang-rapers --- but your egging-on and encouragement of their criminal activities just adds insult to injury.
At least we have to be FORCED to bend over, whereas you are apparently positively eager to service your masters. As I have said before many times here, Leo, you are just a Quisling, a collaborator, a willing accomplice to, and propagandist for, the endemic evil within our financial, monetary and political systems. Please go to Hell.
Your vitriolic attacks just prove to me that I get under your skin because you know that what I write about above is right. You can fight the financial oligarchs all you want, it's a lost cause. But if you're into self-masochism, go right ahead. I got no time to waste trying to convince people like you that it's hopelessly futile to fight the power elite.
I am trying to decide if it is less shameful, or even more shameful, for a self-avowed Quisling to wear that label openly and proudly, as Leo does here.
I thought I had felt as much loathing as I could possibly feel for you, Leo, but you have just managed to open previously undiscovered reserves of contempt.
I realize that you are a citizen of Canadia, and therefore have a kneejerk and instinctive love of authority, along with an automatic submission to power, no matter how overbearing or corrupt, but your kind of venal cowardice was perfectly addressed by an American patriot over two centuries ago:
"If you love wealth more than liberty, the tranquility of servitude better than the animating contest of freedom, depart from us in peace. We ask not your counsel nor your arms. Crouch down and lick the hand that feeds you. May your chains rest lightly upon you and may posterity forget that you were our countrymen.”
—Samuel Adams
"Most people who read "The Communist Manifesto" probably have no idea it was written by a couple of young men who never worked a day in their lives, and who nevertheless spoke boldly in the name of "the workers"."
- Thomas Sowell
"Despite a voluminous and often fervent literature on "income distribution," the cold fact is that most income is not distributed: It is earned."
-Thomas Sowell
akak,
You write so well when you're fenced in! Keep it up, but unfortunately you too will die a slave of the system. -)
The difference between us, Leo, is that in your abject cowardice and abdication, both moral and intellectual, and in your denial of any hope of change (which is inevitable in any event), you are going to die a WILLING slave of the system.
Coward? I post my real name and do not get intimidated by schmucks like you. Cowards are people who constantly need to put others down to make themselves feel better.
Leo,
Get back to me when you grow up --- and when you grow a pair as well (not that I expect either to happen anytime soon, if ever).
And for what's it worth, I do not "need" to put you or anyone else down, and have not been doing so in any case --- you have been doing an excellent job putting YOURSELF down, and digging your own grave in the process, by your incessant and craven calls for all of us to bow down low to our (current, NOT permanent) psychopathic masters. You are truly the epitome of the morally spineless.
Face it, you despicable coward and sociopath, you cannot deny your own depravity and moral surrender to evil, and that is bad enough, but for repeatedly and openly calling for everyone else to jump into the same corrupt and evil cesspool in which you are so eager to swim, I damn you with every fiber of my being.
akak,
Please ask your shrink to increase the dosage. I will ignore you from now in because I am convinced you have psychological issues. Perhaps you can take out your frustrations on Yahoo message boards. Please leave ZH and please NEVER, EVER comment on my posts again. Your comments are completely and utterly useless. Take the other idiots with you on Yahoo.
What a pathetic and vacuous response --- precisely just what we have come to expect from you, coward and shill for TPTB.
With your wholesale denial of reality, lack of any moral sense, love of power and submissive attitude to authority, I suggest that you forget about posting your bullshit here on ZeroHedge, and go to where your talents might be best employed, such as the US Federal Reserve, or perhaps JPMorgan.
As for your medical advice, I should point out that it is you and not I who is crippled --- in body, mind AND soul.
God damn you, Leo.
akak,
The only vacuous responses on the comments section come from you! If you don't like the system, FUCK OFF and go live somewhere else. You and all the other so-called "patriots" aren't going to change squat. Face it, they own you, all of you. Everything you do is owned by some corporation. You can sit here, grab your balls, and tell me what a man you are, but you're a fucking peasant. Now fuck off, and stop posting useless comments. If you loathe me so much, should be easy for you to ignore me!@#!#!!!!
[To ZH readers: I apologize for my vulgar language but this idiot has serious issues and I've had enough!]
I guess the truth hurts, doesn't it, you pathetic son of a bitch?
Thanks for providing yet more evidence of your moral abdication and surrender, however --- I continue to laugh at your cluelessness of just how low and venal a piece of filth you really are.
akak,
You want the truth? Ok, here it is:
Leo, you may want me to fuck off, but the innumerable vile, pro-establishment, morally bankrupt, and laughably permabullish posts of yours that have been literally junked into oblivion by dozens of other posters here on ZeroHedge testify to the fact that there are many, many more of us here that would rather see YOU fuck off. So please do everyone involved a favor, and leave. Oh, and take all your obsequiously pro-Wall Street, pro-corruption, bankster-kissing bullshit with you when you do.
Face it Leo: you do not fit in here, nor do you belong here. The whole tone of everything else on ZeroHedge centers around the criminality, corruption, and unsustainability of the financial and monetary status-quo --- except for your permabullshit ravings. Why are you even a part of this site, when you deny the whole tenor of everything else disseminated and discussed on it?
"The worse a situation becomes the less it takes to turn it around, the bigger the upside."
-George Soros
"Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria."
-Sir John Templeton
+1,000,000,000! love those quotes!!!
Just more of the insightful and astute analysis that we have come to expect from you, Leo. When you grow up, perhaps you may even be willing and able to engage in discussion in an intelligent and mature manner.
Hmmm, let me quote you:
"As for your medical advice, I should point out that it is you and not I who is crippled --- in body, mind AND soul.
God damn you, Leo."
Is this what you mean when you want me to "engage in discussion in an intelligent and mature manner." For last time, just FUCK OFF and go away. You need medication to help numb the emotional pain you're going through. Unfortunately, I can't prescribe you anything over the internet.
Let me repeat the salient point:
Face it Leo: you do not fit in here, nor do you belong here. The whole tone of everything else on ZeroHedge centers around the criminality, corruption, and unsustainability of the financial and monetary status-quo --- except for your permabullshit ravings. Why are you even a part of this site, when you deny the whole tenor of everything else disseminated and discussed on it?
Leo, it is you who needs to fuck off and go away --- as the countless number of junkings that your posts routinely (and rightfully) receive here will attest.
akak,
Last I checked, I actually contribute relevant information on ZH on a daily basis. Moreover, the people who run ZH welcome my submissions. Deal with it, and get over it.
I am guessing that it would be more accurate to say that the people who run ZH tolerate your submissions --- for the moment. As for why they tolerate you, that is a matter for speculation, as your every contribution is contrary to the very essence of what ZeroHedge otherwise stands for. But just in the last year there have been a number of former contributors who have gotten the boot, and I have no doubt that you are the next in line to receive it when it comes.
Ironic that you label your contributions to ZH as "submissions", as submission (to power, to corruption, to evil) is at the very heart of your every post here.
WOW
All the
way
on
the
right
margin.
Cheers.
All right! A junk fest! I want to play! I junk everybody!
Leo you still scoopin the poop? I mean, buyin the dips? How are those solar stocks doin? Heard not so well.
This article from Leo is SHOCKING, JUST SHOCKING.
HAHAHAHA
Wow, I guess you do get what you pay for.
(Or not, as in this case.)