Santa Claus Pushes On...
Santa Claus Rally pushed on today despite worse than expected Empire State Index. Empire State Index, an index that measures manufacturing activities in the New York region, continued to show contraction for a fifth straight month, something which traditionally would have investors rush for bonds. However, investors continued to return to equities today despite the bad number, causing a surge in bond yields across the board. Clearly Santa Claus is ruling the market right now but with quadruple witching coming up this Friday, we may see some volatility over the next few days.
The rally today is a surprising and dangerous one. It kept the Dow in short term overbought condition despite a strong bearish divergence and yet failed to make any significant new highs. This could actually lead to a bit of selling into the strength over the next few days. However, the Santa Claus rally remains evidently strong and should carrying on through the new year.
For now, the Dow remains in short term neutral trend within an intermediate neutral trend and primary bull trend.