Santa Has Already Arrived

Originally posted at Briefing.com

The Dow Jones Industrial Average topped 18,000 — and closed above 18,000 — for the first time ever on Tuesday. Meanwhile, the S&P 500 tacked on a little more than three points and is sitting a snowball's throw away from 2,100. Yep, jingle bells are ringing alright on Wall Street.

Both the Dow and S&P 500 enter this truncated Christmas Eve session (market closes at 1:00 p.m.ET) in fine shape, sitting at record highs. The Nasdaq isn't any slouch either. It dipped Tuesday under the weight of the biotech stocks, yet it's still up 14.1% year-to-date versus the S&P 500 and Dow, which are 12.6% and 8.7%, respectively.

2014 is finishing with a flurry, too. Since its low last Tuesday, the S&P 500 is up 5.6%.

Some — nay, many — are calling it a Santa Claus rally, although we think a "Fed Feast" would work just as nicely. It's tough, though, not to default to the jolly image of St. Nick for joyful descriptors this time of year, so we'll play along.

As for the actual Santa Claus rally period discussed in the stock market, it begins today. According to the Stock Trader's Almanac, the last five trading days of a year and the first two trading days of the new year represent the Santa Claus rally period.

It is said to be so because that period often produces a nice gain for the stock market. In fact, the Stock Trader's Almanac indicates it has been good for an average 1.6% gain for the S&P 500 since 1969.

Reportedly, a decline for the market over that seven-session span tends to precede bear markets or a period when stocks could be purchased at much lower prices later in the year. In considering that point, remember that it is an observation and not a guarantee.

Also bear in mind that there will probably be excuses (and reasonable ones at that) if Santa doesn't show this year. After all, we've already seen a near 6.0% gain over the last five sessions. Santa was here.

Santa might be needed in China, however. The Shanghai Composite has dropped nearly 5.0% in its last two trading sessions, sliding 1.9% today amid reports of a rising non-performing loan ratio. We'll stop there, because no one likes to be accused of being a Grinch on Christmas Eve.

Some better news today came from the weekly initial claims report, which offered another encouraging glimpse of labor trends. Specifically, it revealed that claims for the week ending December 20 fell to 280,000 from 289,000 in the prior week.

Continuing claims for the week ending December 13 climbed to 2.403 million from 2.378 million, yet the initial claims data will hold sway given the inference that it points to a strong likelihood of December nonfarm payrolls exceeding 200,000 once again.

The S&P futures are trading 0.2% above fair value. That indication is pointing to a positive start for the cash market in what is apt to be a thinly-traded session as traders turn their interests to the impending arrival of a not-so-thin, but always jolly St. Nick.

Enjoy the holiday everyone! The market will be closed on Thursday.

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