EmailToday will be an early close for the stock market at 1:00 ET. Volume will be light and the market could be very volatile.
A high level of volatility all week is possible. That was the case the day after Thanksgiving in similar thin holiday trading conditions, when the S&P 500 index surged 18 points despite any important news that day. That move was in the middle of an uptrend, so that day's action can be seen as a magnification of underlying sentiment. The sentiment this week is not likely to be as bullish as it was at Thanksgiving, but strong moves (either direction) on little news are very possible.
Futures suggest a slight down open. The market remains obsessed with the fiscal cliff negotiations, or the lack thereof. The holidays will make further progress extremely difficult, and the bitter tone is only likely to increase as the new year begins.
There are no earnings releases this week. There are no economic releases today, but new claims, new home sales, and consumer confidence data will be out on Thursday.
There is a chance of a typical end-of-year "Santa Claus" rally, but expectations are tempered this year because of the fiscal cliff overhang. The Stock Traders Almanac defines the Santa Claus rally as covering the final five trading days of the year plus the first two of the new year. Since 1950, the S&P 500 has gained an average 1.5% over that period. That is a pretty large gain for just over a week, and some years the gains have been very strong. That bias can't be ignored even with the pervasive fiscal cliff pessimism.
Dick Green
Chairman, Briefing.com
