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Market Goes Through the Motions – Enough for Santa Rally?

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December 26, 2014

So, this is the unofficial official week of the “Santa Rally,” so says the history books. Christmas Eve performances left the broader stock market poised for a solid finish to this record-breaking year but thin conditions always make for a bit of a challenge, especially as volatile commodities markets missed the memo on holiday down-time.

One for the History Books? The Dow Jones Industrial Average (DJIA) scratched out its 37th record close for the year in a shortened Christmas Eve session. Ahead of that, it had closed above 18,000 for the first time ever earlier this week. You might find it interesting to know that the DJIA has been up in the year’s final five trading days 93 times in 117 years, or just shy of 80% of the time. Does the market have enough gas to hang there? Some fatigue may set in as this year’s pre-Christmas run in the DJIA was the strongest since 1991. Then again, few may be willing to step in front of this momentum. The broader S&P 500’s (SPX) five-day winning streak fizzled on Christmas Eve after fresh record highs for it too. It has logged 51 record highs this year.

FIGURE 1:

Chart from McClellan Market Report shows actual DJIA performance compared to long-run historical performance. For illustrative purposes only.

Is Crude the Market to Watch? With stock activity slowed to a crawl, investors might find a nibble of news out of the energy space. Crude oil prices were up over 1% in early trading Friday after an over 2% pounding on Christmas Eve on a surprise inventory build. The battered market found some traction amid concerns about Libyan supply amid fighting around its biggest port. Separately, Saudi Arabia projected a huge drop in revenue for 2015 due to lower oil prices. But traders found an interesting nugget in that story — a former economic adviser told Bloomberg News that projection assumes $80-a-barrel oil. Keep in mind, U.S.-traded oil futures stood near $56 a barrel early Friday, with Europe-traded Brent just above $60.

News Will Find You. Few companies are issuing stock-driving news but sometimes the news is unavoidable. Sony (SNE) has been dominating the headlines this week with the controversy (no such thing as bad publicity?) around its reported hack related to its controversial comedic film “The Interview,” finally released in dribs and drabs over the holiday including in direct download. But it looks like the reach of that event may have spoiled a few Christmas afternoons for kids that opened their new PlayStation, also from Sony, or Microsoft’s (MSFT) Xbox. Both companies confirm network issues that affected online assistance to set up new gaming systems, with limited access returned by Friday morning. Neither said why exactly, but some hackers took credit for the interference on Twitter (TWTR).  It could be hard to put much of a positive spin on that publicity.

Good trading,
JJ
@TDAJJKinahan

NC
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