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Are we still going to have the Santa Rally?

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Are we still going to have the Santa Rally?

Poll ended at Sun Dec 18, 2011 7:53 pm

Yes, the Santa will be here in time and even earlier!
61
60%
No, forget about it, there'll be no Santa this year!
41
40%
 
Total votes: 102

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Cobra
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Are we still going to have the Santa Rally?

Post by Cobra »

OK, guys, poll time. With the market pulled back this week, how many of you still think we're going to have the Santa Rally this year?

But before that I think I need explain a little about Santa Rally, because it seems lots of people think Santa Rally happens before Christmas. Well, the Santa Rally refers to the last 5 trading days of the year and the very first 2 trading days of the new year. Sometimes Santa did fail to show up and in this cases, it usually led to a bear market thereafter or at least you could buy stocks at much cheaper price later in the year.
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hiker
Posts: 1
Joined: Fri Dec 09, 2011 1:09 pm

Re: Are we still going to have the Santa Rally?

Post by hiker »

yes
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Me XMan
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Joined: Thu Feb 17, 2011 12:01 pm

Re: Are we still going to have the Santa Rally?

Post by Me XMan »

Yes there will be a rally but how big of a rally is the question. :o
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mac769
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Re: Are we still going to have the Santa Rally?

Post by mac769 »

If you look at the yields of the ten year treasuries versus the SPX, it is from my point of view highly doubtful whether we see a rally, provided Santa does not shower billions of Euros onto Euroland...

As the yield is normally highly correlated with the SPX, something needs to give in here, and normally it is the stocks that follow the bonds.

According to the chart, the yield has clearly broken below the November lows, which would imply that the SPX follows sooner or later.

This would set a target range in the area of 1150-1160, and the first signs of weakness clearly show up in the inability to break through the 200 SMA and now even falling below the 50 SMA, which is not really the sign of strength you would normally combine with a "Santa Rally".

Have a nice weekend and let's see if the bond market is once again right next week.
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taggard
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Re: Are we still going to have the Santa Rally?

Post by taggard »

the key to any santa claws rally--may be how spx acts this week. ideally there would be weakness in the Monday to Wednesday time frame. it does not need to be epic (that would be nice) but more grinding with a downward bias.

getting closer to Christmas anyone who wanted to sell (esp as the levels go down) would have been more likely to have done so. Pros are on hedged and on vacation until the early part of Jan. and the market is thin--a very small amount of actual buying (esp given the machines remember the pre fed pop on the 5 min?) could have a very decent effect.

so what is a claws rally anyway? stock traders almanac says the period 1969 to 2009 averaged 1.6% (spread was +8.2%to -4%). in this market the 1.6% average is intra-day trading half the time. of the entire period 40 years--the rally showed 30 times and we declined the other 10x. so 3 to 1.

my data using a 10 and 30 day moving averages of the nyse suggests we are ovesold but not hideously. 2-3 down days ideally early in the week would likely get that math much better (more over sold).

someone last week mentioned that we need a hard sell (gap down and they take it up hard that day sort of thing) to flush weak holders out--again this fits the idea we are close to decently oversold--but not epic.

it's a drag not making nice clean absolute statements--but (1) there is a very decent chance of a small rally or sort of upward sloping range given history and the over bot. (2) a much better rally would happen if we could just weaken a bit more and give people the sense next week that we are going down into the end of the year.

the poll we have on this site--at this point suggests the majority see upside. this fits the general market outlook (as i see it looking around) anything that would jar that view for a very short period of time would be optimal for some sort of absurd move up to 1300-1400.

just as in fighting or speed dating often the best move is a fake in one direction and a stronger move in the other--a fake up could mean a range with a positive bias but not a great rally into the end--a fake down could mean a stronger move up.

The hedging of the pros can work to the upside if a stronger than expected effort is made near the very end of the year--as the hedges get yanked that is more fuel for the fire. since people tend to focus with the existing area in mind call it 1990 to 1230 (around the middle bollinger band on a monthly)--if (if) this area is "left in the dust" what was prudence becomes "a loss" (not really since it's a hedge--but you hate to hold losing positions either way).

It's interesting to note that of the 7 days of an "average" (sigh. . there is no such beast in reality--but it is a nice construct giving the illusion of absolute bedrock solidity) santa claws rally the action was in the first 2 days (+.30% and +.33% and the second trading day of the year +.45% on the 2nd trading day in jan.

so this year that would be a strong friday (day 1) with the idea "dudes you so gots to buy cause we be skyrocketing next week" and monday "dude i so told you now get in or choke". four relatively lame days and then a blowout Tuesday 1-4-12.

all this would be a fine start to the dreaded Mayan 2012 disaster where massive solar storms create epic radiation drawn though the earth towards the black hole at the center of the galaxy. Don't believe it right? Well try this quote from barrons this week--

"Wall Street strategists see U.S. stocks rising 12% next year, but most of the gains will come in the second half. Europe's response to its problems will call the tune. The case for big dividend payers."

you can count on (1) dividend payers imploding (2) china or the us blowing up and euro guys delaying till 2013. (3) either a gain of 24% or a loss of 12% because the majority is usually off on things--but we never know the direction.

the majority at the start of this year were 10-12% gains (mostly based on historical patterns of 3rd year president cycle stuff as well as the delusional belief that "on average the market returns 10% a year". (to do this means 1386 to 1411 in the next 9 trading days or 141 to 192 spx points. well the high end is only 21 points a day for 9 days. . .

THANKS as always cobra for all the effort in the background as well as the foreground.
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bullybear
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Re: Are we still going to have the Santa Rally?

Post by bullybear »

Double edge question? We have Santa rally, but from much lower levels, then rally back sideways up thin volumn chop to current levels by 12/27 12/28 then whamo, rug disappear :lol: So if somebody call that Santa rally, then yes, we have Santa rally.... but not any higher high -- So then, NO we have no Santa rally. We rally back up so broke bull can have some fake hope that pray work but we go nowhere higher. I personal think we may not even do that -- we might just drop and chop and drop and chop till real bottom -- when credit market sieze bull cry and broke -- bull need to do lots and lot of pray. Broke bull :lol:

"I selected the FRA OIS spread to illustrate the credit crunch is happening already. The graph shows that it costs a full 1% more for a bank to borrow for three months in the wholesale markets than for a bank to borrow overnight at a rate linked to the ECB. This is up from a 0.2% extra cost in the summer, pre-crisis. But even at this higher interest rate, many banks cannot find anyone willing to lend to them - the interbank funding market is frozen." LOUISE COOPER, MARKETS ANALYST AT BGC PARTNERS" (her chart)
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May Day, May Day... Houston, we have problem... This Captain Tom DeMark of flight 1360... we have collided with unidentified flying space craft... we need emergency landing... :lol:
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uempel
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Re: Are we still going to have the Santa Rally?

Post by uempel »

taggard wrote:the key to any santa claws rally--may be how spx acts this week. ideally there would be weakness in the Monday to Wednesday time frame. it does not need to be epic (that would be nice) but more grinding with a downward bias.

getting closer to Christmas anyone who wanted to sell (esp as the levels go down) would have been more likely to have done so. Pros are on hedged and on vacation until the early part of Jan. and the market is thin--a very sm.
Taggard, as to Wallstreet strategists:

GS writes that SPX trading range for 2012 is 1150 - 1250, should there be a meltdown in Europe the low would go down to 1000, their 12 month target for SPX is 1250...
taggard
Posts: 428
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Re: Are we still going to have the Santa Rally?

Post by taggard »

uempel wrote:
taggard wrote:the key to any santa claws rally--may be how spx acts this week. ideally there would be weakness in the Monday to Wednesday time frame. it does not need to be epic (that would be nice) but more grinding with a downward bias.

getting closer to Christmas anyone who wanted to sell (esp as the levels go down) would have been more likely to have done so. Pros are on hedged and on vacation until the early part of Jan. and the market is thin--a very sm.
Taggard, as to Wallstreet strategists:

GS writes that SPX trading range for 2012 is 1150 - 1250, should there be a meltdown in Europe the low would go down to 1000, their 12 month target for SPX is 1250...
the exact quote from inside the barron's story was


The mean prediction of the 10 stock-market strategists and investment managers surveyed by Barron's is that the Standard & Poor's 500 Index will end 2012 at about 1360, some 11.5% higher than Friday's close of 1220. That sounds like a big gain, but a lot of things have to go right for the market to make such impressive headway. Even the most bullish of these Street seers fears stocks could be more wobbly in the next six months than in the six months past.

Ironically, 1360 is very nearly the same S&P 500 target offered up a year ago in these pages -- for 2011. But what a difference a year makes. Last December, the strategists and investors we rounded up were looking ahead with modest but sturdy optimism. I

So it's not every one--just the usual end of the year barrons stuff.

as for projecting 1000 if there is a euro zone melt down--it all depends on what GS means--1000 seems a very relaxed reaction. the idea continues to be the powers that be will just buy the markets and cap any downside. and maybe it is that simple for the next 2-7 years. but you have to wonder if the end of this bear has something to do with the ongoing behavior changing in some form--as well as rate of change in technology.

trend now seems to be between 900-1100 some place--and often trends are over shot. Personally i would love to see a break under the last low--as happened in the 64-84 time frame but maybe the consensus is right and it will be more like the 1929-1939 time frame which would fit some sort of 1000-900 thing. aside from the math--what's notable is that everyone (even GS seemingly more realistic than the 10 guys barron's surveyed) are focused on the Euro Zone.

the rule of thumb is that when everyone focuses on one thing--something else is the issue. i have no clue what that is--or if it is in addition to the euro zone. or if that thing is good or bad. just getting a little edgy about the narrow focus on that one issue. it's not that it's not important--it's just that other stuff is sort of getting shoved off the screens.

have a good sunday
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