This past week the much anticipated Santa Clause rally brought the markets to new record highs, and the momentum is expected to continue through year-end on light volume. Economic news was positive, with an unexpected large drop in New Jobless Claims (down 42k) to 338k, a 0.5% increase in Consumer Spending, Durable Goods Orders up 3.5%, and New Home Sales up 464k.
Earnings season will begin January 8th, and volume is expected to rise to normal levels again. Expectations are for continued growth with some profit taking on high flying stocks.
Next week the focus will be on the manufacturing and housing. The week will start with Pending Home Sales and the Dallas Fed Mfg Survey and move to ISM Mfg Index and Construction Spending ending with FedSpeak.
Year-to-date the markets are up: Dow 25.8%; S&P500 29.1%; Nasdaq 37.7%.
The Markets for the past week were: DJIA up 1.6%; S&P500 up 1.3%; Nasdaq COMP up 1.3%.
Commodities (ETFs) for the past week were: Gold (GLD) up 1.02%; Silver (SLV) up 3.49%; Oil (OIH) up 0.76%; Dollar (UUP) down -0.32%; 30-yr Bonds rose 2 basis points to 3.84%.
The VIX this past week (a measure of market sentiment and volatility) dropped to 12.46 due largely to the Santa Clause rally on little news and volume.
In the U.S., cutoff in federal jobless aid looms; wait-and-see economy slows recovery; US jobless claims drop; on tap for next year: legit economic growth?; durable goods surge in November, boosting outlook; forget the currency war, now it's a deflation war; US bond market selloff weighs on mortgage apps; California judge bars pension cuts for city workers; consumers perked up in November, now will business?; Fed's Lacker: expect $10B baseline for next taper; economy goes from crawl to gallop in 3rd quarter; debt ceiling could be hit in February, say Lew; consumers, deficit top CFO worries for 2014; and leading economic indicators rise in November.
In Europe, ECB's Draghi: no urgent need to cut rates further; Monte Paschi shareholders approve cash call delay; Hollande suffers as French jobs deadline looms; energy deal tightens Russia ties to Assad; Merck seeks drug production partnership in Iran; Spain to cut taxes for low-income earners; more bang for your investing buck outside US; violent attacks reported against Ukraine protesters; even with EU membership change slow for Bulgaria; Euro zone's 2014 pressure point - politics; think shopping is nuts in US? Check out the UK; hipster hobbies: cashing in on ancient skills; Unicredit to sell $1.3 billion of non-performing loans; Norway's $815 billion oil fund faces key decisions; Britain donates most to World Bank fund for poor; Rolls-Royce confirms formal bribery investigation; Italy makes last0minute 2014 budget dash; Airbus CEO coaxes ECB to go 'further'; Trichet believes 2014 will be a 'year of economic growth'; and businessmen and academics are denied entry to Ukraine.
In Asia, China formally eases one-child policy; China approves pilot to open mobile telecoms market; China will not overtake US economy until 2028, CEBR; a windfall of Chinese investments in Ohio; Japan inflation at fresh five-year high in November; Japan pension fund boosts allocation to stocks; private jet makers see big opportunity in China; South Korean private equity flourishes; why Asia can brush off tapering next year, says Invesco; some fund managers turn positive on emerging markets; internet cafes losing out in China's online battle; why a new government may not boost India's reform prospects; Japanese Prime Minister Abe visits Yasukuni Shrine; could dollar-yen hit 125 next year?; Woodside stake may be split if Shell sells out; SoftBank gets closer to buying T-Mobile; retailers not the way to play China consumer growth, says Pimco; China short-term rates ease, fiscal deposits help; coal and crabs: anatomy of the N. Korean power grab; Singapore's GIC agrees £1.7 billion Broadgate deal; China cash injection to send message, avoid panic; and Santa makes early stop in Japan as Nikkei tops 16,000.
On Monday, with solid news on consumer spending and income and consumer sentiment, the Dow rose 0.5% to 16,294.
On Tuesday, with strong economic news from manufacturing, housing, and retail, the Dow rose 0.4% to 16,357.
On Wednesday, the markets were closed for Christmas.
On Thursday, as year-end momentum continues, the Dow rose 0.8% to 16,479. Gold held at $1,200; Oil is testing $100.
On Friday, with little news, the Dow dropped fractionally to 16,471.
Next Week's Calendar
The economic calendar for next week is moderate: on Monday – Pending Home Sales, Dallas Fed Mfg Survey; on Tuesday – S&P Case-Shiller HPI, Chicago PMI, Consumer Confidence; on Wednesday – markets closed for New Year's Day; on Thursday – Weekly Jobless Claims, PMI Manufacturing Index, ISM Mfg Index, Construction Spending; and Friday – Motor Vehicle Sales, FedSpeak.
If the Markets move down, stay on the side lines or consider Contra ETFs. For Option players, selling premium is advised. To learn more about options and earning consistent weekly income, go to optionsannex.com. This article is authored by Ron Berg.
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