Point: Its starting to look like the Santa Clause rally is working its way up Wall Street following a very sharp correction in the first part of December, fueled by the cratering oil market and fears of another collapse of the Russian ruble, the Chair of the Federal Reserve, came across with precisely what the market was looking for. More upside follow through, or at least a decent day, tomorrow and we should be set for a typical (or even larger than average) Santa Claus Rally and higher highs by year end or early January.
Counterpoint: This was merely a correction. The QQQ as well as the rest of the market works in waves 80 percent of the time. Climb, pull back. Climb, and pull back, much like the wave on the beach. The other 20 percent of the time is non standard time when either the market is totally roaring with no brakes, or in a nose dive because of any report or external or internal event.
Santa Clause rally? No, the market simply hit the bottom of its indicators and gapped up today jumping halfway back up its indicators in a single day:
And as for January? Just going by what the market did in previous years after Christmas is a pure asshole move, totally irresponsible. You have to read what is currently happening when you forecast, and that means paying attention not only to the technicals, but to the fundementals of the market including forecasts for upcoming reports, the global arena, and major commodities such as oil. Are we about to invade a country? Is there a disease rapidly spreading like there was in October? Etc.
Point:At that point, if the momentum stalls, look for the January break. January has been prone to profit taking selloffs in recent years. After any January/February correction the rally should resume, carrying us to new heights in the first half of 2015. While low oil prices may be a drag on energy producer margins it is quite bullish for the rest of the economy, the consumer and the market. As for Russia, this is not 1998. The situation is more contained and Putin himself warned of $40 oil today. Russia has half a trillion dollars in currency reserves and tons of gold it can use if things get tougher there. And besides the writing has been on the wall for quite some time so economic woes in Russia are no surprise.
CounterPoint: If the market keeps dropping during december, its gonna go up in January, and vice versa. While historically there has been some profit taking during January, the market goes in cycles of waves on a beach. It just depends on what point its at in January. As for calling the market during the first half of 2015 Yahoo finance gets it wrong and here is why:
The underlying weakness of the market? A couple of reasons. First, the fed is artificially propping it up and has been since they have been pumping money in it since the crash of 08. Second, the fed is printing billions of dollars worth of paper a month not backed on anything such as gold trying to keep the value of the dollar up. Also our nations debt? Go look that up, its approaching 20 trillion dollars. And China owns a good part of that debt. As a matter of fact there are a few websites out there that claim that the market is going to crash in 2015-2016 with one of the biggest crashes we've ever had, a crash that will dwarf both 2008 and 1929. It wont be good, and you can read about there here.
I think yahoo finance wants to paint you a rosy picture like its sometime in the 1990s and its not. Lots of underlying things lurking right under the surface of things. Things that are rigged, charged, and set to blow.
Point: With the market up over 2% today across the board it looks like we have put in a higher low than October and formed a nice “W” bottom with the August, October and December lows this week. So it appears that seasonality, technical analysis, fundamentals and economics have all come together at the moment. Market forecasting is a difficult and hazardous endeavor, but somebody has to do it and it’s a tradition we do every year at this time.
Counterpoint: Nice, light and airy. Kind of like wearing your old navy cap and gloves and scarf and wishing someone Merry Christmas. Well, F that noise, I live in the world of the real and I take a hard look at things as they come.
Mark
http://the1045report.com
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