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S&P 500 Closed at Record Highs Ahead of Christmas, Setting Up for the Traditional ‘Santa Claus’ Rally

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#Christmas #rally #stocks #commodities #memes #cryptocurrency #economy #politics

$DIA $SPY $QQQ $RUT $VXX $USO $GLD $USD $DXY $CEI $GREE $NKLA $KNIGHTSUSD

“The rise of risk-on investments ahead of Christmas by traders also drove up gold and Crude Oil” — Paul Ebeling

DJIA +196.67 at 35950.56, NAS +131.48 at 15653.36, S&P 500 +29.23 at 4725.79

Thursday, the S&P 500 rose 0.6% finishing Christmas wk. The DJIA gained 0.6%, while the NAS Comp (+0.9%) and Russell 2000 (+0.9%) both gained 0.9% ahead of the coming Santa Claus Rally

9 of the 11 S&P 500 sectors closed higher with consumer discretionary (+1.2%), industrials (+1.2%), and materials (+1.0%) each rising at least 1.0%. The real estate (-0.4%) and utilities (-0.03%) sectors lagged.

  • S&P 500 +25.8% YTD
  • NAS Comp +21.5% YTD
  • DJIA +17.5% YTD
  • Russell 2000 +13.5% YTD

Historically, “Santa Claus” rally refers to the time between Christmas and into the 1st 4 days of the New Year where the market has a tendency to move higher.  It assumes the portfolio adjustments for tax purposes, the closing of corporate books for the Quarter/Year-end, retirement funding, and overall Christmas Holiday cheer, helps lift market sentiment and prices higher during the frame, and prices usually confirm the theory.  

Key Commodities

WTI Crude Oil futures rose 1.2%, or $0.85 at $73.62/bbl, gold futures settled up $7.60 (+0.4%) at $1,810.60/oz, and the US Dollar Index decreased 0.1% to 96.03.

The Memes

Camber Energy Inc. (NYSEAMERICAN:CEI) had posted a gain of around 13.7%, as of noon trading. According to Fintel data, 500,000 shares were available to short sellers at about 10a, and halfway through the Noon hr, that number had dropped to Zero. The company had no specific news, so it appears that some Reddit apes are trying to put a big hurt on shorts.

Another double-digit gainer Thursday was electric and hydrogen truck maker Nikola Corp. (NASDAQ:NKLA), which posted its first delivery to a customer Wednesday afternoon along with a promise of more to come.

Shares of Greenidge (NASDAQ:GREE) traded up more than 13.32%, at $19.35 in a 52-wk range of $12.70 to 519.04 (split adjusted). The average daily trading volume is around 2.3-M. shares, and more than 4.758-M/shares traded on the day.

The Cryptocurrencies

Digital assets have disrupted traditional financial services, but they are enemies of USD. In fact, a type of digital asset, the stablecoin, has the potential to cement USD dominance worldwide. But if the USD is to capitalize on stablecoins’ potential, US policymakers and regulators must take a measured approach to regulation.

Mainstream use of stablecoins is expanding, with the market growing from $5-B b in December 2019 to more than $158-B in December 2021.

One reason for this growth is stablecoins’ inherent advantages over current financial technologies. For instance, stablecoins can be transferred instantaneously to anyone around the world with little to no transaction cost.

Meanwhile, KNIGHS is comfortably trading in the mid $700 range up from its launch in late March 2020 at $00.50/each.

The US Economy

  • Personal income increased 0.4% month-over-month in November and personal spending increased 0.6%. The PCE Price Index was up 0.6% month-over-month and the core PCE Price Index, which excludes food and energy, was up 0.5% On a year-over-year basis, the PCE Price Index was up 5.7%, Vs 5.1% in October, and the core PCE Price Index was up 4.7% Vs 4.2% in November.
    • The Key takeaway from the report is that the bad inflation data should keep the Fed focused on gearing its monetary policy toward battling inflation.
  • Initial jobless claims for the wk ending 18 December were unchanged at 205,000. Continuing claims for the wk ending 11 December decreased by 8,000 to 1.859-M.
    • The Key takeaway from the report is that it covers the week in which the survey for the December Employment Situation Report is conducted. With the low level of initial claims, economists should be predicting some relatively strong gains in December NFPs.
  • New home sales increased 12.4% month-over-month in November to a seasonally adjusted annual rate of 744,000 units from a downwardly revised 662,000 in October. On a year-over-year basis, new home sales were down 14.0%.
    • The Key takeaway from the report is that the growth in new home sales is concentrated in higher-priced homes, as inflation pressures, exacerbated by supply constraints and labor shortages, are curtailing the building of lower-priced homes and pinching affordability for lower-income buyers.
  • The final December reading for the University of Michigan Index of Consumer Sentiment came in at 70.6 Vs the preliminary reading of 70.4. The final reading for November was 67.4.
    • The Key takeaway from the report is that the improvement was driven by higher income expectations among households in the bottom 3rd of the income distribution, which has been sparked by higher wages for younger workers and a 5.9% increase in Social Security payments for Y 2022.
  • Durable goods orders increased 2.5% month-over-month in November. Excluding transportation, durable goods orders rose 0.8%.
    • The Key takeaway from the report is that there was some slowing in business spending in November, evidenced by the 0.1% decline in orders for nondefense capital goods excluding aircraft.

There is no economic data scheduled for Monday when the market reopens from the Christmas holiday weekend. 

Politics

The investigation into the origins of the “Russian collusion” hoax where Democrats claimed the Y 2016 campaign of President Trump (45) colluded with Russian operatives to dig up dirt on Hillary Clinton, was the starting point of “rigging the 2020 election” by tainting the Trump presidency for yrs with a baseless claim.

Have a Happy Christmas Holiday Weekend, 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.