Is Santa Claus Coming to Wall Street?
Let's look at the intermediate-term indicators to see if we might get a Santa Claus rally this year.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
Note: My Twitter (err, X) account was hacked over the weekend. If you looked for me and couldn’t find me and found a crypto spammer instead, that is why. I have a new account, @Chartfest1 but since I would rather post under my own name (and that is no longer an option on Twitter) I have an account at Bluesky where my handle is @hmeisler.
I was asked if the intermediate term indicators are lining up for an overbought condition come January. It’s possible, but it’s more likely we get a correction in the next week or so and rally again into year end. As a reminder, everyone will yap about the Santa Claus Rally, but it is not the month of December. It is the week between Christmas and New Year's and then the first two days of January.
So if we do pull back in the next week or so (likely), I would expect a Santa Rally to set up.
The Overbought/Oversold Oscillator will be back to fully overbought by the end of this week (it is only slightly overbought now).
The 30-day moving average of the advance/decline line has been poking around the zero line for a month now. We didn’t allow it to get fully oversold. I believe if we had the market would be higher than it is now. But we did not.
I do however expect this to push upward this week. But then the math says it should come back and go up, etc. Take a look at it, do you see a trend there? Just a lot of chop.
The McClellan Summation Index is moving higher but when the Russell is at the highs and this is coming off the lows, you can see it’s not been a great market. A net differential of -1200 advancers minus decliners on the NYSE will halt this rise. Keep that in mind as we head toward a short term overbought condition later this week.
The Volume Indicator got to 49%, just missing a good oversold reading by a point or two. And in all this rallying it got to 50%, which is where it sits now. Again, had we allowed this to get fully oversold I think we’d have a market in better shape now. But instead we have this indicator in the middle of nowhere. If it gets to 55% by the end of the week, it will be overbought.
You already know about sentiment since we’ve covered that plenty recently. I would end by noting the bonds have had a terrific rally (about time!) and are nearing support in terms of yield. Recall my first target (on the yield) was 4.1% and we are now at 4.19%.
Considering the Utes led the way and they were down two percent on Monday I would not be the least bit surprised to see the bonds fall back a bit this week.
