12|28|2021

Santa’s Coming | December 24, 2021

AUTHOR: Jason J. Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, FRB, CPI, Rates, Sentiment

Is Santa’s rally coming, or will Omicron steal the show? Most importantly, what does it all mean for 2022?

Monday

The week opened in free fall as the Nasdaq led the way lower. Omicron news and the Build Back Better plan getting nixed seemed to sour investors to open the week. Haven stocks did not gain interest in leu of an equity sell off. This came as a result of the anticipated Federal Reserve Board (FRB) rate increases in 2022.

Tuesday

Markets spiked up on Tuesday. It was strongly seen as investors deciding to ‘buy the dip’. There has been a 3% pullback over the last few sessions. The S&P 500 gained 1.78% on the day.

Wednesday

‘Buy the dip’ continued on Wednesday. One clear distinction from a normal ‘buy the dip’ is that volumes are definitely holiday lite. That means that very little can be made of the current rally. The S&P 500 ended up gaining 1.01%.

Thursday

In a holiday shortened trading week, markets climbed to close the week.  A word of caution would be that trading volume has been extremely light! It has been running 25% of that of a normal trading day. Not surprising, but cause for caution that this buy spree may not be well founded.

Friday

Merry Christmas! Don’t shoot your eye out!

Conclusion

The week started with an echo of last week’s trading weakness. It very quickly shifted to perhaps the beginning of a Santa Claus rally. Historically, this occurs the week between Christmas and New Year’s. Again, on light trading volume. This could lead to a strong year end but could be of concern for a pullback in January. Also, given past circumstances, the US will likely be in the thick of the Omicron variant come January.

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