'The Market' dodged a bullet Friday - as we got the early-morning washout and rebound hoped for, and then Expiration did not impede the comeback. As the day evolved, Congress moved toward a thinner-trimmer CR, and then we got (after the Close) the House and later the Senate; both signing off on that.

All of this 'in theory' left algorithms conflicted between bull & bear thesis; but of course it was the comforting thought of a sufficiently 'slow' economy, that evoked a comment from Austin Goolsbee, that we might have a friendlier Fed in 2025; even more than 'just' two rate cuts during the new year.

Gee glad to hear he concurs, as it's what I suggested yesterday, as did Goldman Sachs guy, as we both disputed the market's 'gut' reaction to the Fed Chairman's comments, whether intended to bushwhack things or not. In my view he did not intend that; just was realistic. I had already opined some sort of big-cap setback was due next year; probably a couple sell-off waves.

Given some sort of big-cap S&P setback due next year; probably a couple waves of sell-offs; and not necessarily right away before Inauguration; since a lot of skeptics expect that. I was in that camp somewhat; may still be, but let's see how the year-end and new year start, before proclaiming the S&P's 'drop'.

So sure, it was a bit off-putting that the market would react so dramatically, to the Chairman, given what seem reasonably in the cards anyway. It's a reason I don't think even the Chairman thought he'd ruffle feathers notably; and thus called for a washout and rebound for Friday. Then it shuffled into Expiration.

Perhaps that's why they trotted out Goolsbee Friday, to calm the waters a bit. I think the set-up is just fine; because now we're through Expiration 'and' that Continuing Resolution impasse, which was more pertinent to markets anyway. That's a 'done-deal', so in-theory 'algorithms' go back to work Monday as with or without a typical effort to see if there's any early downside post-Expiration, and there can be, we then punch higher, especially led by the heavily shorted.

Market X-ray: this pattern evolves generally as preferred this week, and thus sets-the-stage for a year-end rally, with requisite allowance for disrupted daily trading patterns, due to shorter (Christmas Eve) or zero trading (Christmas).

No video need; you all know where things stand and going as projected. So enjoy the holiday weekend, and I'll have more remarks on Monday. Graphics tell the tale pretty well this weekend...

Bottom  line: I must say for those who exercised Calls on volatile 'stocks that worked', there will be more shuffles come Monday, as transactions will relate to Expiration at first. Also there's saying these last 5 days of the year 'belongs to retail', which sort of insults investors over so-called Wall St. pro-traders; at the same time this year has a whole lot of players who are making traditional money managers look archaic in terms of missing the AI and Quantum plays.

So I don't know the longevity of short-term moves; won't speculate which will be acquired, fail, or fly and prosper, but that's what a bit of diversification. As to the 'sectors', both remain at the forefront as far as we're concerned. 

Enjoy the semi-holiday weekend!

More By This Author:

Market Briefing For Monday, Dec. 16th
Market Briefing For Monday, Dec. 9
Market Briefing For Monday, Dec. 2