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Jeffrey Saut: The call for this week

* December 27, 2016

For almost two years the S&P 500 (SPX/2263.79) was locked in a trading range (Chart 3) as many pundits proclaimed a “top” was being formed, a crash was coming, etc. We, however were steadfast in the belief all that was happening was an upside consolidation building the base for another leg to the upside in this secular bull market. In August of this year the SPX broke out of that trading range and subsequently gained over 100 points, Q.E.D.! Plainly, the equity markets are seeing that something “good” is coming. Again as Bespoke notes, “If you are in the business of investing and haven’t realized that the market is forward looking, you are in the wrong business.” And maybe, just maybe, the market is realizing that for the most part deal maker businessmen, who know how to get things done, will be running the government for the next four years (just a thought). This week participants will be watching for the fabled Santa Rally, which occurs between Christmas and New Year’s. To wit, according to the Stock Trader’s Almanac:

Since 1969 the Santa Claus rally has yielded positive returns in 34 of the past 45 holiday seasons — the last five trading days of the year and the first two trading days after New Year’s. The average cumulative return over these days is 1.4%, and returns are positive in each of the seven days of the rally, on average.

Following that folks will be watching the January Indicator, while we will be watching the January Barometer. More on those two indicators in days to come . . .

http://www.raymondjames.com/pointofview/if-santa-fails-to-call-the-bears-will-roam-on-broad-and

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