It’s that time of year when volumes slump, leaving traders here and there to pass the time by rewriting Christmas classics so that the Fed is the star instead of Santa Claus.
“You knew that Liftoff’s on its way / Despite QE that ZIRP just couldn’t stay,” croons blogger Macro Man. (Sorry, Nat King Cole.)
Meanwhile, Jani Ziedins over at CrackedMarket warns: “Since so many institutional money managers are on vacation over the next two weeks, we cannot read too much into these daily gyrations.” He advises waiting for January “when we have the full force of the market giving us more meaningful data to interpret.”
But after getting that caveat about thin volumes out of the way, Ziedins says the stock market’s latest action suggests “the next leg will be higher.” Read more in the call of the day.
On the other hand, the Global Dow stock index GDOW, +0.80% is testing a key trendline again — and its growing tendency to test that level could mean a breakdown and 10% drop. That’s the latest worry for Dana Lyons of J. Lyons Fund Management, who warned earlier this week about increasing bearishness in the “smart money” set — meaning traders of S&P 100 options.
The call
Remember the market’s big drop last week? After this week’s two up days, Ziedins says the selloff seems to have stalled. There just doesn’t seem to be that many people owning stocks who are “willing to emotionally react to every spooky headline or drop in price,” he says.
“No matter what the ‘experts’ think we should do, if owners don’t sell, it is difficult to kickoff the much-anticipated correction,” he writes. “The longer this market refuses to breakdown, the more likely it is the next leg will be higher.”
Key market gauges
S&P ESH6, +0.29% and Dow YMH6, +0.46% futures are higher, as the stock market tries for a third up day in a row. Oil futures CLG6, +1.74% are in the green, and Europe SXXP, +2.21% is gaining after Asia closed mostly higher. Gold GCG6, -0.22% is edging lower, while a key dollar index DXY, +0.10% is little changed.
“Everyone in this place thought they were going to make a run at us. ... I said, ‘Let’s be the team that makes the run and get it up to 20.’ But that’s Michigan State. That’s what they did.” — Basketball coach Greg Kampe after his Oakland Golden Grizzlies couldn’t hang on to their lead against No. 1 Michigan State, losing last night in overtime.
The stat
64 degrees Fahrenheit. That’s the high forecast for New York City at Christmas, above the 57 degrees expected in Los Angeles. A weather pattern linked to El Niño has “turned winter upside-down across the U.S.,” as an AP report puts it. Oh, and it’s not doing any favors for energy bulls.
The buzz
Nike NKE, +1.58% is gaining in premarket trading after an earnings beat late Tuesday, while Celgene shares CELG, +0.27% are higher after the biotech settled a patent fight. But Bed Bath & Beyond BBBY, +1.91% could be set for a down day after the retailer cut its third-quarter outlook. Micron MU, -1.08% is also lower after offering a weak outlook.
Cal-Maine Foods CALM, -0.91% is reporting ahead of the opening bell.
The iShares India 50 ETF INDY, -0.26% and three other country ETFs could perform well due to crude oil’s crash, says Zacks Investment Research.
The economy
Gatherers of economic data haven’t gone on vacation quite yet. At 8:30 a.m. Eastern Time, watch for a report on durable goods, plus data on personal income and core inflation. Consumer spending rose 0.3% in November as expected, with that figure out early due to an inadvertent release, the Commerce Department said.
At 10 a.m., we’ll get fresh readings on consumer sentiment and new home sales, followed by U.S. oil rig-count data at 1 p.m.
Hope you had some Russia, China and bonds in your portfolio during the past year, and not much Brazil or Canada. Torsten Slok, Deutsche Bank’s chief international economist, has provided the handy chart above showing 2015 returns for a range of assets.
