Here's Hoping Santa Makes The Trip

It was a very busy weekend in St. Louis, visiting our grandson, daughter and son-in-law, so I'm going to keep the subjective side of this report short and let the models and indicators do most of the talking. But first, let me say that watching a two-year old tear into presents is about as much fun as a grandparent can have!

In the spirit of the season, the WSJ has an article about the traditional Santa Claus Rally this morning. To review, the Santa rally spans the last five trading days of the year and the first two trading days of the new calendar year. While we are still a few sessions away from the official starting date, the article points out that the average gain for the seven-day span has been 1.3% for the S&P 500 and that the last time Santa failed to appear at the corner of Broad and Wall was 2015. The problem is the S&P 500 index is currently down 2.8% (however, the "total return" index - which reinvests dividends is currently up 1%). As such, if the bulls hope to push the venerable index back into the black for the year, they've got some work to do.

Our heroes in horns remind us that there are two possible developments that could get the year-end party started this week. First, there is the Fed meeting, which concludes with a Jay Powell presser on Wednesday. The bulls hope that the Fed Chair's comments will be in the spirit of the holidays and take a dovish tilt - as in, a rate hike and then a pause to reflect on the changing economic climate.

The second potential bullish trigger is more of a stretch as a potential government shutdown is slated for 12:01 a.m. Saturday. Both sides are dug in and hopes for a deal are not high as we enter the week. But lest we forget, a week in Washington D.C. is like a year everywhere else. Fingers crossed that a deal gets done.

Looking at the action in the stock market, there is only one word that can be applied to last week: U-G-L-Y. The problem is that all the news is bad, including the most recent economic data on China. (And did we really need an old story about asbestos in baby powder at this time?)

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Disclosure: At the time of publication, Mr. Moenning held long positions in the following securities mentioned: none - Note that positions may change at any time.

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