Markets took a rest Friday with gaps higher across the board, met with a fade of the gap selling.  The end result was a flat day with the SPY (down 0.02%) and QQQ (down 0.008%) on the red side of flat and the DIA (up 0.09%) just on the green side of flat. However, this still leaves markets right at all-time highs.  It’s worth noting that volumes were near average across all indices. 

For reference, this was the fifth straight week of gains as Santa Claus continues his rally.  Interestingly, the VXX climbed 2% Friday to a still-low 15.23.  In addition, T2122 fell out of the overbought territory, down to 73.04.

Over the weekend, there was no major news.  North Korea apparently did not follow through on its threatened “Christmas Present for the US.” However, the US did attack apparently Iranian-aligned militias in both Iraq and Syria.  Other than that, there was just a now-normal church shooting and knife attack on a Hanukkah celebration. So, just a standard, low-key weekend…nothing to rile markets

Monday’s major economic news includes Trade Balance and Auto Inventories (8:30 am), Dec. Chicago PMI (9:45 am), and Nov. Pending Home Sales (10 am).  With another holiday upon us, again this week there are no major earnings reports.

Overnight, Asian markets were mixed.  In Europe, markets are all in the red at this point.  As of 7:30 am, U.S. futures are flat, sitting on either side of Friday’s closing value.

All-in-all, we are wrapping up another great year for stocks as markets have gained close to 30%, despite trade fears, on the back of three Fed cuts (even with a strong domestic economy).  With those gains in their pocket, it is doubtful bulls will be willing to allow any of their profits to evaporate in the last two days of the year.  So, the bulls have both the momentum and reason to defend the highs the next couple days. 

At this point, it seems over-extension and the unknown are the only things to fear early this week.  With that said, remember that volumes will likely continue to be light as many traders take more time off for the holidays.  So, continue to plan your trades, and trade your plans.  Don’t chase (there will always be another trade, I promise), keep taking profits along the way, move your stops to protect yourself and wait for the trade to come to you.

Ed

Swing Trade Ideas for your consideration and watchlist: FTCH, PSX, BX, KO, MA, CPB. Trade smart, take profits along the way and trade your plan. Also, do not forget to check for upcoming earnings. Stocks we mention and talk about are not recommendations to buy or sell.

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Disclosure: We do not act on all trades we mention, and not all mentions acted on the day of the mention. All trades we mention are for your consideration only.

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