No Santa Rally This Time? | Daily Market Analysis

Key events:      

• USA – Pending Home Sales (MoM) (Nov)

Many investors were hoping to see at least some semblance of a Christmas rally last week but ended up waiting only for a small purely symbolic pre-holiday rebound. Perhaps that's just to keep things from getting too depressing on Christmas Eve. The only thing we can be happy about is that the market didn't fall into a severe sell-off and managed to hold on, maybe by heroic efforts, above the local lows of this year. The latter is especially true for the NASDAQ index of high-tech stocks, which ended Thursday just 1.5% from that fateful line, and in the course of trading was even down to that unpleasant level of support. But luckily, on Friday, the Personal Consumption Expenditures Price Index (PCE) macro data was quite favorable and it calmed the nerves of over-excited investors.

​

Still, the market picture is not very attractive. The situation is more or less quite good only in the blue-chip Dow Jones index, which even managed to grow a little (+0.88%) over the past week and from the technical point of view continue to consolidate above its support levels – both the 50-day and the 200-day moving averages. The main and most important broad market index keeps beating its head against the ceiling of its 50-day SMA, but it still cannot break out that resistance level. Though losses by the results of the week are insignificant and amounted to only 0.2%.

​

The last week of 2022 is short and largely meaningless. But that does not mean that investors will be completely indifferent to it. On the contrary. In a thin market – and many investors are often out of the market during this period and still finishing Christmas and preparing for the New Year – you can probably do just about anything. You could, let's say, crash the market (you can't do much better than that!) or you could try to stage a small Santa rally. Many people are really looking forward to the latter. So we have a chance to see it and it is not zero.

The week started out seemingly positively. In principle, there is no special reason to rejoice (except for Christmas, of course!). But fortunately, there was also no unpleasantness during the past long Christmas weekend. So why not take advantage of the opportunity to drive the stock prices of major US companies a little higher? Especially since many stocks – especially in the tech sector – are actually looking very attractive already.

It seems to be felt today by traders of futures on the major US indices, which from the very start of trading added more than half a percent to Friday's close and are not going to go down yet. Most likely the main trading session will be held in the same positive way. Especially, there is no one to look back on today – Hong Kong is not trading today and continues to party and celebrate Christmas, and Europe, though it is out for trading, activity there will be minimal and these trades will not determine anything.