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No Scrooge Here? Stock Market Tries for Cheery Cap to Upbeat Holiday Week

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December 24, 2015

Stock indexes traded mixed in pre-market action but eventually tipped higher, a potentially upbeat wrap to a shortened, but strong, trading stretch after last week’s plunge. Thin, potentially volatile holiday trading will end early, at 1 p.m. Eastern, and markets will remain closed on Friday for Christmas.

The stock theme for this week has largely been the short-term rebound in crude prices, helped in part by contract rollover and other factors that industry analysts believe do little to change a bearish outlook for heavy world supplies and weak prices. Oil price gains yanked energy and materials stocks higher—a move that was strong enough to lift up the broad S&P 500 (SPX) some 2.9% so far this week.

December is shaping up much like November—a two-faced stock performance that ultimately leaves the leading averages near flat at month-end. This, of course, follows a strong rally in October. So, where might it all net out for 2015? As of Wednesday’s close, the SPX is up a skinny 0.3% year to date (figure 1).

SPX stock chart

FIGURE 1: ULTIMATELY…FLAT.

The S&P 500 (SPX), plotted here on the thinkorswim® platform, pushed higher for a third straight session on Wednesday in this holiday-shortened week. The average is little changed for the year heading in to the final trading week of 2015. Data source: Standard & Poor’s. For illustrative purposes only. Past performance does not guarantee future results.

Just Like 1973? Weekly jobless benefits claims fell to 267,000 in the latest reporting week, while the less-volatile one-month average rose to 272,500, but clings to a 15-year low. Here’s an interesting note from MarketWatch: new claims have averaged 278,000 each week so far this year. That means the average weekly number of benefits applications for 2015 will fall to the lowest level since 1973—the result, say government economists, of unusually low layoffs and steady hiring. There’s another side to the government’s data collection, however. MarketWatch reports that the number of Americans who want but cannot find a full-time job remains high by historical comparison, as the post-recession recovery continues to crawl along at a slower-than-usual pace some six years later.

Check That SPX Chart. The broader market continues to watch the potentially psychologically significant SPX 2000 line on the downside. But true entrenched support actually comes in to play at 1990. That means a few pokes of 2000 and below could be in this market’s post-holiday future. Upside resistance steps in at the 2077 to 2092 range, notes Sam Stovall, equity strategist at S&P Capital IQ, in a note. And, if any run higher could break the 2115 mark, the market bias would shift to bullish, Stovall says.

Deal Movers? Looks like potential deals can come together even during Christmas week. Salesforce.com (CRM) shares could see increased volume following late-Wednesday news that the software company plans to buy billing service firm SteelBrick for a total deal value approximated at $360 million.

Happy holidays to you and yours.

Good Trading,

JJ

@TDAJJKinahan

Swim Lessons: Dive In

Learn from platform pros with daily Swim LessonsSM on the thinkorswim® platform. Coming December 30: Trading Take-Aways of 2015

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