Market Recap For 14th Dec 2014 – Stocks tank, oil plunges – can we count on a “Santa Claus Rally?”

By Markus Heitkoetter

Well, that was a doozy! After making new all-time highs just a week ago, stocks ended the week with the biggest weekly loss in years.

The S&P traded lower on 4 out of 5 days, ending Friday’s session with a 33 point loss. With a 3.5% loss for the week the S&P closed at 2002.33. We know that round numbers can act as psychological support levels. With a close just 2 points above round number support, it’s highly likely that the 2000 mark has the potential to be the line in the sand between the bulls and the bears this upcoming week.

The DOW was crushed on Friday, suffering a 316 point loss. Down 3.8% the DOW closed at 17280.83 at week’s end. Last week’s 678 point loss was the largest weekly point decline since September 2011.

This upcoming week will be highlighted by the FOMC Statement Release on Wednesday at 2pm ET, and Crude Oil Inventories at 10:30am ET on the same day. The Crude Oil Inventories release typically doesn’t get stock traders too excited…but when Crude Oil drops 12% in a single week and stocks start dropping with the commodity, stock traders should probably start to pay attention.

Are the markets ready for Santa? The Santa Claus Rally is typically defined as a stock market rally from Christmas to the New Year. Stocks tend to rise slightly in the last couple of weeks in December most likely due to portfolio rebalancing, lower volume, and investors getting ready for the new year. We’ll see if the early December losses are just too much for Santa to handle. Or maybe he has just a few tricks up his sleeve for the upcoming trading sessions.

They say that stocks drop twice as fast as they move higher. If this is true then this past week’s drop in Boeing (BA) was a picture perfect example. After a Power Crossover Method Sell Signal at $127.73, BA slide for 3 consecutive days and lost more than 5%. Friday’s $122.24 open was actually a bit of a bonus after the stock opened below our $122.53 ADR target.


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