Awaiting Mid-Month Market Rally Resumption & Santa

Charts, Commentary, News, Stocks

According to CMEGroup’s FedWatch Tool, there is currently a 97.8% chance the Fed will take no action on interest rates during its last meeting of 2019 and the decade. We will get a press conference and an update to their Summary of Economic Projections that may, through a subtle nuance give some insight into next year and beyond, but here again, it seems unlikely there will be any substantial changes. Rather, let’s take a quick look at the balance of December could unfold based upon the last twenty-one years.

For the most part, this December have unfolded in rather typical seasonal fashion. Weakness at the start of the month was a little greater than usual, but the following rally was also above average. Currently the major indexes are navigating the often-dull period from around the fourth trading day pf the month through the eighth. Afterwards, later this week into early next week, another patch of weakness is possible. Then right around mid-month, the rally that began in October and ran through November, is likely to resume. The resumption could be bumpy but once quarterly options expiration passes our Santa Claus Rally will begin. Since 1969, S&P 500 has enjoyed an average gain of 1.3% during the Santa Claus Rally that spans the last five trading days of this year and the first two trading days of next year.

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