“The Bulls will drive the Santa Claus Rally in to the New Year” — Paul Ebeling
Last Week’s Action
Again the US economic data came in strong, the benchmark indexes finished on the highs.
The small-cap stocks led Wednesday, cloud software, some chips and some online retailers are setting up for moves North in the New Year.
Santa Claus has been generous during this rally week, as the small caps “lit up”, but the gains were slim for the large-caps.
The Russell 2000, S&P 400 and PHLX Semiconductor Sector (SOX) posted nice gainers to end the year’s action.
Now looking for the SOX to mark a breakout after the consolidation finishes.
S&P 500, NAS Comp, DJIA: The large-cap indices gapped higher last Monday in a breakout move from their 3-wk ranges. Paused Tuesday, then produce gainers Wednesday.
Year 2020, a terrific yr for US stocks is in the Scrapbook as the Bulls charge in to Y 2021.
The economy is Strong, and The Trump Fed will continue to do what is necessary to keep it Strong.
Analyst and investors see several parts of this market, including financials, leisure & hospitality stocks and energy with strong rally potential into Y 2021.
Investors see a continuing rally and are optimistic of a rebound in corporate earnings. Earnings will be used as a confirmation of current pricing.
S&P 500 company earnings are forecast to increase about 23% in Y 2021 compared with Y 2020.
Last year’s laggards are expected to join in Y 2021 in a broader rally, with a strong showing by value stocks, shares of small caps and non-US listed stocks.
And growth companies with dominant and emerging business models that can continue to meet or exceed shareholder expectations will continue to participate.
Have a healthy week, Keep the Faith!