Last week's stock market had a Jekyll and Hyde feeling, setting the background for the two weeks ahead. We will have lighter volume and plenty of people taking vacation during the holiday-shortened weeks. With plenty of explaining to do and a new year ahead, we can expect:
A Parade of Pontificating Pundits!
Prior Theme Recap
In my last WTWA I predicted that the market stories for the week would consider the possibility of a Santa Claus rally. That was the right question, since it got plenty of buzz from the media, but my suggested answer – “Yes” – looked good for only part of the week. While it is still technically possible to see Santa (last five trading days and first two of the New Year is the “official” definition) it is not looking good. For the full story, let us look at Doug Short's weekly chart. Doug's full post quashes the Santa Rally idea and shows the various relevant moving averages in another very negative week for stocks. (With the ever-increasing effects from foreign markets, you should also add Doug's weekly chart to your reading list).
Doug's update also provides multi-year context. See his weekly chart for more excellent charts and analysis.
We would all like to know the direction of the market in advance. Good luck with that! Second best is planning what to look for and how to react. That is the purpose of considering possible themes for the week ahead. You can make your own predictions in the comments.
This Week's Theme
The long-awaited change in Fed policy had a dramatic effect on Wednesday—all good. Everything – stocks, the dollar, interest rates, commodities – all changed course on Thursday. This provides plenty of grist for pundits to explain the Jekyll and Hyde market mentality of the week just passed. Since it is also time for end-of-year explanations and predictions, we can expect —
A Parade of Pontificating Pundits!
There will be a wide range of viewpoints projecting a few days of trading into the year ahead:
As always, I have my own opinion in the conclusion. But first, let us do our regular update of the last week's news and data. Readers, especially those new to this series, will benefit from reading the background information.
Last Week's Data
Each week I break down events into good and bad. Often there is “ugly” and on rare occasion something really good. My working definition of “good” has two components:
The Good
Despite the negative result for stocks, there was plenty of good news last week.
