Santa Arrives on December 26

The term "Santa Claus rally" is tossed around a lot. It is from December 26 until the second trading day in January. That's it. Everything else is normal seasonality.

Checking in on the charts. The S&P 500 is above my bear line. This doesn't mean I'm bullish per se, I'll still be looking to add short positions, but it means the possibility of a plunging drop is off the table for now. Given the strength in Apple, I consider the ES a lagging index that will be the last to signal a bear move is underway. It remains important because it is the most watched index.

The Nasdaq is above its September high, what I dub the first "taper top." It is coming up on its March 2020 trendline. There is an inverted H&S pattern developing. This pattern will complete if it takes out what is now the March 2020 resistance line. Target would be around 16,300, which would reverse almost all of the losses since December 16. If Santa comes early, this breakout should happen quickly. A sideways move could delay Santa until after Christmas. A failure below 15,700 would open a possible retest or breaking of the recent lows.

The Russell 2000 Index is also coming up on a resistance line.

Palladium also moved back above the January 2016 trendline. A cleaner inverse H&S is visible here. I continue to view this as a Nasdaq indicator.

The speculator indicator popped overnight. It will breakout of this mini consolidation pattern if everything else resolves bullishly this morning. For the moment, it is back in the pattern.

Coffee looks like a good short here. Stop would be ultra-tight. Hope would be to catch the start of a larger down move.

Soybeans.

I am bearish on the stock market and I lean towards a deflationary impulse taking it down, but that will be determined by crude oil. If black gold rises, then it could be an inflationary impulse that catches the Fed behind the curve and forces suprise rate hikes, 50 bps moves and balance sheet reduction. There is still an h-pattern forming on CL. This is hell for bears in bull moves and hello bear market if it completes and cracks that trendline I have drawn.

To sum it up, I'm wary of a bullish move because of my positioning, but while it will cost me in the short-term, I see no reason to change my long- or intermediate-term forcast, or even short-term going out a month. Only in the ultra-short term of the next nine trading days, which encompasses the traditional Santa Claus rally period, are potentially bullish to me. What I'm focusing in on is the quality of the rally. If stocks such as ARKK lead, it it increases the likelihood this is a bear market. "I am out of ideas" stocks like Apple are ones to watch. Will staples, utilities and real estate remain strong hinting at continued sector roation?