Home 2022 Santa Claus Rally Consolidates on Profit Taking, FOMC Mins Seen as Hawkish,...

Santa Claus Rally Consolidates on Profit Taking, FOMC Mins Seen as Hawkish, Investors Now Seek Value, “MAGA Nation Must Rise”

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#stocks #banks #Fed #FOMC #ADP #jobs #WHO #DeFi #knights #DAO #Trump #MAGA

$DIA $SPY $QQQ $VXX $USO $GLD $USD $DXY$RELI $GS $BTCUSD $KNIGHTSUSD

FOMC mins noted the persistent inflation pressure and the large budget deficit, catalysts for taking some profits in here”— Paul Ebeling

DJIA -392.54 to 36407.11, NAS Comp -522.54 at 15100.17, S&P 500 -92.96 to 4700.58

The NAS Comp and Russell 2000 both dropped 3.3%, the S&P 500 dropped 1.9%, and the DJIA fell 1.1% after marking an all-time high intraday.

Growth stocks extended intraday losses, as the 10-yr yield topped 1.70% in the wake of the FOMC report, while value stocks gave up intraday gains. All 11 S&P 500 sectors closed lower, with real estate (-3.2%), information technology (-3.1%), and communication services (-2.9%) each falling about 3.0%.

  • DJIA +0.2% YTD
  • S&P 500 -1.4% YTD
  • Russell 2000 -2.3% YTD
  • NAS Comp -3.5% YTD

Key Commodities

WTI Crude Oil futures settled higher by 1.1%, or $0.82 at $77.82/bbl, Gold futures settled $10.50 higher (+0.6%) at $1,825.10/oz and the US Dollar Index is -0.4% to $95.91.

The Memes

Wednesday, meme stocks traded lower, as they are considered growth stocks.

AMC Entertainment Holdings Inc. (NYSE:AMC) traded down by about 11% on no specific news.

GameStop Corp. (NYSE:GME) retreated by around 13%, also on no specific news.

Electric truck and van maker Rivian Automotive Inc. (NASDAQ:RIVN) also traded down more than 11% following an announcement from Amazon and Stellantis that the two companies have signed several multiyear agreements “that will transform the in-vehicle experience for millions of Stellantis customers and advance the mobility industry’s transition to a sustainable, software-defined future.

Cryptocurrencies

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Notably, some decentralized finance (DeFi) tokens that fell out of favor in early Y 2021 still managed to retain some Top spots in terms of total value locked, which represents the number of assets that are staked in a protocol. Perhaps as they are considered more battle-tested and a safer store of capital compared to newer competitors.

For now, even with altcoins in the headlights, volatility has declined in both BTC and ETH recently.

Our view is that this volatility compression is structural and will be a theme for 2022. That said, we believe this dip in the front-end of the volatility curve is overextended and we are adding long gamma in here.

Savvy traders are “long gamma profit” when the underlying asset moves more than expected.

US Economy

ADP estimated that 807,000 jobs were added to private sector payrolls in December up from a downwardly revised 505,000 in November.

The preliminary IHS Markit Services PMI for December decreased to 57.6 from 58.0 in the final reading for November.

The MBA Mortgage Applications Index decreased 5.6% on a wkly basis. 

Looking Ahead: Investors will receive the ISM Non-Manufacturing Index for December, the wkly Initial and Continuing Claims report, the Trade Balance for November, and Factory Orders for November Thursday.

Politics

President Trump (45) called on the “MAGA nation” to “rise up” against “egregious federal government overreach.”

Have a prosperous day, Keep the Faith!

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Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.