There's an old adage been shuffled around by the analysts of the world: if there's no end of year rally, which typically occurs in the last five days of the year and first few days of the coming year, stocks will fall in the coming year.
Mmm, the first week in January is going to be mighty interesting.
Now where did I put my bear costume...
UK
Mmm, the first week in January is going to be mighty interesting.
Now where did I put my bear costume...
UK
Are bears roaming Wall Street ?
What will next week say about the new year?
Rough road ahead in 2006 !
Equities are primed to end 2005 barely higher and the first half of next year could be tough.
NEW YORK (Reuters) - The first week of January is a storied week on Wall Street, deemed so important that some say the week's results can forecast the gains or losses for an entire year. But with no Santa rally and questions lingering over what the inverted yield curve means, investors may return from vacations next week in a bearish mood, analysts said. Many traders had hoped for a Santa Claus rally in the final week of the year. But it fizzled last Friday before the old boy could even blow into town. Instead, thin volume led to volatile movements in stock prices, while crude oil futures climbed back above $60 a barrel, and the bond market began to behave as if the U.S. economy faces trouble.
For the final week of 2005, all three major U.S. stock indexes fell. The blue-chip Dow Jones industrial average finished the week down 1.52 percent, while the broad Standard & Poor's 500 index slipped 1.61 percent, and the tech-laced Nasdaq Composite Index fell 1.96 percent. "If Santa Claus should fail to call, bears may come to Broad and Wall," the Stock Trader's Almanac says, referring to the site of the New York Stock Exchange in lower Manhattan.
That adage suggests that if a Santa rally, which typically occurs in the last five days of the year and the first two days of January, doesn't materialize, stocks will fall in the coming year.
The Dow ended 2005 lower, declining 0.61 percent for its first yearly loss since 2002. But both the S&P 500 and the Nasdaq rose for the third straight year. For 2005, the S&P 500 climbed 3 percent, while the Nasdaq gained 1.37 percent. Still, a lot of money usually comes back into the market as a new year begins, with some on Wall Street and elsewhere looking for places to invest year-end bonuses. And that could make the difference as to how much steam that stocks can pick up next week, according to Saut of Raymond James. "Typically at the beginning of the year, there is a tendency toward reinvestment dollars, which should at least give the market a hint of an upward rise," Saut said.
Dangerous curve
On Tuesday, the two-year U.S. Treasury note's yield rose above the benchmark 10-year Treasury note's yield, inverting the yield curve for the first time in five years. Previous inversions have typically signaled a slowing economy or recession. In the week to come, investors will likely be mulling over whether this time around, the inverted yield curve means the economy is headed for a slowdown or whether heavy foreign buying of U.S. Treasury debt has distorted its meaning.
Jobs, factory bells and shopping
Next week will be data heavy, as reports about U.S. manufacturing and services-sector activity, chain-store sales, and the December employment situation are due. But analysts said none of the news from those reports is likely to be good enough to push stocks meaningfully higher. "I think we'll probably get a brighter picture on retail sales for Christmas, which could (inspire) people a little bit and help the short term," said Ned Riley, chief executive and chief investment officer of Riley Asset Management, in Boston. Weekly store sales data is expected on Wednesday, while U.S. chain stores will report monthly sales results on Thursday. The data will tell investors how retailers did in the important holiday shopping season, and help give a read on how confident consumers were in their spending. Retailers typically do about one-fifth of their yearly business in the holiday season, according to the National Retail Federation. Domestic car and truck sales for December also are due on Wednesday.
On the economic front, the Institute for Supply Management is due to report December manufacturing and non-manufacturing, or services-sector, activity next week. Economists polled by Reuters expect the ISM's manufacturing index to slip to 57.5 in December from November's reading of 58.1. That report is due on Tuesday. And although they expect a decline, economists said the index would still show that the manufacturing sector is expanding, albeit at a slower pace. The ISM's non-manufacturing index, due on Thursday, is forecast to rise to 59.0 in December from 58.5 in November, the Reuters poll of economists showed. The monthly jobs report from the U.S. Department of Labor, another key measure of U.S. economic health, is also on deck. Analysts polled by Reuters expect the economy added 200,000 jobs in December, down from November's 215,000 jobs. They believe the unemployment rate was unchanged at 5 percent.
Investors also will comb through the minutes from the Federal Open Market Committee's December 13 meeting to look for clues about how much further the Federal Reserve would like to raise interest rates. The FOMC's minutes, which will be released on Tuesday, also will get a careful reading for any hints of what the committee is thinking before Ben Bernanke's arrival as Fed chairman. Many economists are forecasting that the Fed will stop raising interest rates in March.
What will next week say about the new year?
Rough road ahead in 2006 !
Equities are primed to end 2005 barely higher and the first half of next year could be tough.
NEW YORK (Reuters) - The first week of January is a storied week on Wall Street, deemed so important that some say the week's results can forecast the gains or losses for an entire year. But with no Santa rally and questions lingering over what the inverted yield curve means, investors may return from vacations next week in a bearish mood, analysts said. Many traders had hoped for a Santa Claus rally in the final week of the year. But it fizzled last Friday before the old boy could even blow into town. Instead, thin volume led to volatile movements in stock prices, while crude oil futures climbed back above $60 a barrel, and the bond market began to behave as if the U.S. economy faces trouble.
For the final week of 2005, all three major U.S. stock indexes fell. The blue-chip Dow Jones industrial average finished the week down 1.52 percent, while the broad Standard & Poor's 500 index slipped 1.61 percent, and the tech-laced Nasdaq Composite Index fell 1.96 percent. "If Santa Claus should fail to call, bears may come to Broad and Wall," the Stock Trader's Almanac says, referring to the site of the New York Stock Exchange in lower Manhattan.
That adage suggests that if a Santa rally, which typically occurs in the last five days of the year and the first two days of January, doesn't materialize, stocks will fall in the coming year.
The Dow ended 2005 lower, declining 0.61 percent for its first yearly loss since 2002. But both the S&P 500 and the Nasdaq rose for the third straight year. For 2005, the S&P 500 climbed 3 percent, while the Nasdaq gained 1.37 percent. Still, a lot of money usually comes back into the market as a new year begins, with some on Wall Street and elsewhere looking for places to invest year-end bonuses. And that could make the difference as to how much steam that stocks can pick up next week, according to Saut of Raymond James. "Typically at the beginning of the year, there is a tendency toward reinvestment dollars, which should at least give the market a hint of an upward rise," Saut said.
Dangerous curve
On Tuesday, the two-year U.S. Treasury note's yield rose above the benchmark 10-year Treasury note's yield, inverting the yield curve for the first time in five years. Previous inversions have typically signaled a slowing economy or recession. In the week to come, investors will likely be mulling over whether this time around, the inverted yield curve means the economy is headed for a slowdown or whether heavy foreign buying of U.S. Treasury debt has distorted its meaning.
Jobs, factory bells and shopping
Next week will be data heavy, as reports about U.S. manufacturing and services-sector activity, chain-store sales, and the December employment situation are due. But analysts said none of the news from those reports is likely to be good enough to push stocks meaningfully higher. "I think we'll probably get a brighter picture on retail sales for Christmas, which could (inspire) people a little bit and help the short term," said Ned Riley, chief executive and chief investment officer of Riley Asset Management, in Boston. Weekly store sales data is expected on Wednesday, while U.S. chain stores will report monthly sales results on Thursday. The data will tell investors how retailers did in the important holiday shopping season, and help give a read on how confident consumers were in their spending. Retailers typically do about one-fifth of their yearly business in the holiday season, according to the National Retail Federation. Domestic car and truck sales for December also are due on Wednesday.
On the economic front, the Institute for Supply Management is due to report December manufacturing and non-manufacturing, or services-sector, activity next week. Economists polled by Reuters expect the ISM's manufacturing index to slip to 57.5 in December from November's reading of 58.1. That report is due on Tuesday. And although they expect a decline, economists said the index would still show that the manufacturing sector is expanding, albeit at a slower pace. The ISM's non-manufacturing index, due on Thursday, is forecast to rise to 59.0 in December from 58.5 in November, the Reuters poll of economists showed. The monthly jobs report from the U.S. Department of Labor, another key measure of U.S. economic health, is also on deck. Analysts polled by Reuters expect the economy added 200,000 jobs in December, down from November's 215,000 jobs. They believe the unemployment rate was unchanged at 5 percent.
Investors also will comb through the minutes from the Federal Open Market Committee's December 13 meeting to look for clues about how much further the Federal Reserve would like to raise interest rates. The FOMC's minutes, which will be released on Tuesday, also will get a careful reading for any hints of what the committee is thinking before Ben Bernanke's arrival as Fed chairman. Many economists are forecasting that the Fed will stop raising interest rates in March.
FetteredChinos
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Maps for 2006
Morning Chaps and Chapesses, and a happy new year to you all...
thought i might put a little something on here for you to think about, based on seasonal tendencies..
the first chart, is a map of the tendencies for the Dow based on all data going back to 1928...
the second chart is a map of the tendencies for years ending in "6"...
the numbers on both scales are the "trading day of the year" (approx 240 per year)
as you can see, both are bullish at the start of the year, quiet in the middle, and then bullish for the rest of the year...
what is interesting, is that the "6" end of year rally starts at approximately the 130th Trading Day of the year... in other words, some time in mid-July...rather than the traditional early October rally...
will be interesting to look back on this at the end of 2006 to see what does happen in the end...
FC
Morning Chaps and Chapesses, and a happy new year to you all...
thought i might put a little something on here for you to think about, based on seasonal tendencies..
the first chart, is a map of the tendencies for the Dow based on all data going back to 1928...
the second chart is a map of the tendencies for years ending in "6"...
the numbers on both scales are the "trading day of the year" (approx 240 per year)
as you can see, both are bullish at the start of the year, quiet in the middle, and then bullish for the rest of the year...
what is interesting, is that the "6" end of year rally starts at approximately the 130th Trading Day of the year... in other words, some time in mid-July...rather than the traditional early October rally...
will be interesting to look back on this at the end of 2006 to see what does happen in the end...
FC
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macbonzo
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It will be interesting to see what sort of volume we get today. If we only get 1bn on NYSE I suspect the gains will be sold into. However, if we get nearer over 1.5bn I suspect we may close near the highs. I would have to imagine people will move back into the oil sector with NYMEX at $61.47
counter_violent
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Expanding wedge seen on 5 / 15 very clearly .........brace urselves .........bulls / bears locked in combat !
C V
C V
macbonzo
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Certainly, with 40 mins gone the sellers are running the show. The advance/decline line looked pretty impressive, but the Dow just went negative. Got to say the FTSE looks pretty overbought compared to the Dow.
I know its the first trading day of the year, but I'm beginning to feel that the bears are starting to win this battle.
I know its the first trading day of the year, but I'm beginning to feel that the bears are starting to win this battle.
macbonzo
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Morris said:
Oh without a doubt. What I do find highly significant, at the moment, is despite much better volume, the complete and utter absence of buyers. One would expect to see the mutuals move in and mop up the energy sector at least, bearing in mind, the sell off it had last week.
I mean the Dow futures were up 82 points at one point pm. This is not merely filling the gap. Even taking WMT and GM into account, this is a very weak market at the moment.
