Santa Claus Rally Dead?
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Four days before Christmas and the S&P has gone no where this year. In fact the S&P is down 2.5% on the year. Everyone is still talking about the Santa Claus rally. I caution you there is still a lot of volatility in this market. With a short week volatility and the expected move in the S&P is way too high. I don’t expect this to be your typical “slowly grind higher” into the New Year. Let’s use energy as an example. Oil prices have been crushed and we are about $1 away from the Great Recession lows of 2009. Yet the XLE, the energy sector ETF, is nearly 50% higher than when oil was at there 2009 lows. What’s more concerning is financials took the biggest hit on Friday. Higher interest rates are suppose to be positive for financials. Bonds didn’t move much, but to see financials down more than 3% is very concerning.
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