Are we going to get a Christmas Rally in stocks? Perhaps. So thinks Art Cashin quoting Tom DeMark (whose predictions lately have all been about as good as those of another Tom: the infamous Stolper from Goldman Sachs). Either way, any fake rally for purely Career Risk purposes (most hedge funds still underperform the market with two weeks of trading left in the year) will be met with an even more aggressive sell off in the new, "no fiscal stimulus" year. Aka: "the bill."
From Art Cashin:
Forget Heads And Shoulders. Could Those Be Reindeer Hoof Prints On The Charts? - As the S&P grappled with resistance around the 200 day moving average, two veteran technicians hinted that the Fed rescue rally might yet morph into the Santa Claus Rally.
Tom DeMark, creator of several key indicators, thinks that the S&P could rally back up to 1350 just before Christmas. He’s not all sugarplums however. Here’s a bit from a Bloomberg interview:
“The market should top out around Dec. 21,” DeMark said today. “The market rhythm and market balance equilibrium all require the market rally. Once that’s completed, the market will have a vacuum on the downside and we should have a sharp decline.”
Walter Murphy, another legend, in the technical crowd reached a nearly identical conclusion for a variety of other reasons.
Stocks: A coming short term peak (arguably later this month) will probably put pressure on – and ultimately lead to a downside reversal of – the medium term trend. At that point, all degrees of trend – near-, medium-, and long-term – will have a bearish bias
So, a breakout through the resistance around the 200 DMA in the S&P could result in sleigh bells and Santa Claus. Then comes the bill.