Business

Santa Claus may come to see stock investors next week


After a tumultuous time, the decks could be cleared up for a good classic Santa Claus rally next week.

Shares have edged higher over the past week, following an extended pullback on Monday. The S&P 500 has recovered and is up about 3.5% for December through Thursday.

“I think all of the things we care about in December, to a certain extent, are in the rearview mirror,” said Art Hogan, market strategist at National Securities. “We know what [Federal Reserve] will do. We know while this new variant is spreading faster, it’s not as dangerous and we know Building legislation is better back now which is the business of 2022… I think the market can find see a path of least resistance as we end things. “

The market has so much history that the trading days before the end of the year are positive for stocks. According to the “Securities Business Yearbook”, Santa’s rally period – the last five trading days of the current year and the first two days of the new year – mostly when the stock market rallies. The S&P 500 has been active almost 79% of the time on those days since 1928 and has averaged around 1.7% per rally.

Add to that the fact that as the market has had a strong year, the momentum has historically shifted to the last few trading sessions. In that respect, the S&P 500 is up about 25% for the year.

When the S&P 500 has posted such solid gains, the last six sessions have been positive, according to Bank of America. Since 1980, there have been 10 instances of the S&P 500 index gaining 20% ​​or more in the last trading period, and in those nine years, the index has ended higher than the last six days.

December is full of rocks

Stocks entered the last trading session of the year with a breeze, after weeks of instability.

“This is the fourth-highest December since 1987. The average daily volatility for the S&P 500 is 1.1 percent,” Hogan said. “It’s a lot of action.” The most volatile Decembers were in 2000, 2008 and 2018.

Hogan says volume in the last week of the year is typically 20% to 30% lower than usual. “In low volume environments, when the market picks a direction, it tends to move in that direction aggressively,” he said.

Paul Hickey, co-founder of Bespoke Investment Group, said the positive news about the Covid omicron variant this week was the catalyst for reversing the market sell-off. Had Research shows that omicron milder than other variants of the coronavirus. Furthermore, the Food and Drug Administration acceptance medicine are from Pfizer and Merck for the treatment of Covid-19.

“While the market has focused on everything that could go wrong since Thanksgiving, people are now taking a broader view,” said Hickey. He hopes that view is likely to prevail over the next week.

“As we start in early January, we’ll see how the markets are positioning themselves,” said Hickey. He said investors will start to turn their attention to the upcoming earnings season; they don’t seem overly optimistic, which could cause some backlash.

“Going into the earnings season last, there was a lot of negative sentiment based on supply chain, inflation and labor shortages. We had a decent earnings season,” said Hickey.

High growth stocks hit

The selling in November and December lowers the stock. A number of high-growth stocks and ETFs have fallen sharply as investors move to play it safe. Funds that have surged in December include Ark Innovation ETFs and iShares The field of technology software expands ETFs.

“I think some of these growth sectors that have been hit hard will perform a bit better. They could see a rebound early in the year,” Hickey said. “They’re selling off for a number of reasons. One is concerns about the Fed. Also, people have made too much money, and the feeling is that taxes are going up. People are selling stocks before the higher taxes. That is. is more questionable now with a divided Congress.”

Over the past week, the fate of President Joe Biden’s building back better stimulus bill has been questioned when West Virginia Senator Joe Manchin said he wouldn’t support it. Analysts expect to see the next version of the spending plan.

Bespoke’s Hickey said January could be positive for stocks and there’s an opportunity for some stocks to bounce back if impacted by tax breaks sales. “The January effect is positive,” he said. All tax-loss sellers that compress multiples are buyers.

One of the stocks he’s tracking is Boeing. “It’s one of the few large-cap stocks that has dropped so much. I think you can see that,” he said. The plane maker has grown more than 6% in the past week, but is still down 16% over the past six months.

Growth rates and housing data

With the Fed forecasting three rate hikes next year, economic data of all kinds is at the heart of the market.

The housing market has benefited greatly from the near-zero interest rate policy, so all housing data will be closely watched. On Tuesday, house price data will be released. Pending home sales will be reported on Wednesday.

David Petrosinelli, senior trader at InspereX, said the next big data point for the market will be jobs in December and early January. He predicts the market will be relatively quiet next week.

“Next week is usually the snooze week, the week before the new year,” he said. “All the action will come in the first week of January.”

Week-by-week calendar

Tuesday

9:00 am S&P / Case-Shiller house prices

9:00 am FHFA house prices

Wednesday

8:30 a.m. Previous economic indicators

10:00 am Home sale pending

Thursday

8:30 a.m. Unemployment claims

9:45 am Chicago PMI

.



Source link

news7g

News7g: Update the world's latest breaking news online of the day, breaking news, politics, society today, international mainstream news .Updated news 24/7: Entertainment, Sports...at the World everyday world. Hot news, images, video clips that are updated quickly and reliably

Related Articles

Back to top button