Santa always seems to have some influence over the market during this time of year but this year we have experienced an exceptional Santa Claus rally.  A better than expected quarter of earnings, a dovish FOMC, strong employment, and the Phase One tariff relief has made it pretty easy for the jolly old man and reindeer to pull out record highs day after day.  With China now in the news following through on tariffs cuts, the bullish trend shows no clues of stopping just yet.

Asian markets closed mixed but with very modest gains and losses overall.  European markets are trading mixed and mostly flat as traders seem to be taking profits and cutting risks heading into the holiday.  US Futures point to modest gains this morning ahead of Durable Goods and New Home Sales numbers.  After the morning rush, it would not be a surprise to light and choppy price action as traders head out for holiday plans.  I would not rule out the possibility of some profit-taking at some point in the day.

On the Calendar

On the Earnings Calendar, we have just 13 companies reporting on Monday.  Ten scheduled on Tuesday and with the market closed for Christmas on Wednesday, there will be no earnings reports. Of the companies reporting, their none that are particularly notable the entire week!

Action Plan

With Santa’s reindeer pulling hard, the markets continue to rally setting new records nearly every day.  News that China is cutting tariffs as part of the Phase One trade deal may allow this Santa rally to continue on this eve of Christmas Eve.  Today may be the best day of volume this week, but traders should carefully consider the risks of the typical very low volume that could easily continue right into the New Year.  I would not be too surprised to see volumes drop quickly after the morning rush of activity as traders head for their holiday plans.

With nothing much to react to the earnings calendar, the market will likely turn to the economic reports to find some inspiration.  Keep an and eye on the Durable Goods report at 8:30 AM Eastern and the New Home Sales numbers at 10:00 AM.  As a reminder, Right Way Options trading room will be open Tuesday and Thursday for chat only; there will not be a moderator.  Of course, on Christmas day, the room is closed.   As a result, there will be no morning blog post or Morning Market Prep Video until Friday.  I wish you and your family a very Merry Christmas!

Trade Wisely,

Doug