December 27, 2022

Markets:

Dow futures rose on Tuesday as the final trading days of 2022 kicked off, and investors deliberated over whether a Santa Claus rally will appear and lift a market weighed down by recession fears.

China-linked stocks rose premarket as the country eased Covid restrictions. Tesla slumped on news of an extended production pause, while Southwest shed 4% as the airline canceled thousands of flights.

Stocks are headed for their worst yearly performance since 2008 and another down month. In December, the S&P 500 dropped roughly 5.8%, while the Dow and Nasdaq dropped about 4% and 8.5%, respectively. These are the biggest monthly declines since September.

After a brutal year consumed by inflation and recession fears, investors are hoping to cap off 2022 on a positive note. Friday kicked off the period for a Santa Claus rally, which is typically considered the final five-day trading stretch in the current year, as well as the first two trading days in the new year.

Markets were closed Monday for the Christmas holiday, but in this shortened trading week, investors are expecting either relative quiet or further volatility due to low trading volumes.

On the economic front, traders are expecting the latest data on November wholesale inventories and the October S&P/Case-Shiller home prices Tuesday before the bell.

Portfolio:

We enter the final trading week of the year holding set-ups in PDSB, AAL, and ZIM.  It's going to be really interesting to see how this market trades and holds this week.  Already we've expereicned a wild swing of futures trading overnight.  Massive opening on futures to almost even now.  Volume remains light but this is the week of the typical "Santa Rally".  Stay patient and do not press at all this week. Allow price to materalize.  Remember, above 3900 and hold and we have a bull case short term technically.  A break below 3800 and we have a massive bear case short term.  Right now, we remain patient and allow set-ups to materlize.  All this is doing is setting up for a massive opening to 2023 for traders, especailly when volume returns.  The rewards for those who remain patient will be big.  This is the typical market price action we see before the next monster move – whether up or down.  Let's have a great week and enjoy the holiday season!