The Coming Week: Cheered On
With precious little economic or earnings news to distract equity investors, the holiday spirit could live on next week, in keeping with tradition.
Over the past 53 years, stocks have rallied an average of 1.5% in the last five trading days of the year and the first two in January, according to the Stock Traders Almanac. Traders and portfolio managers often buy in late December, ahead of an expected bounce in January, when Christmas bonuses are put to work and investors contribute to 401(k) plans and other retirement accounts.
"Santa Claus tends to come to Wall Street nearly every year, bringing a short, sweet respectable rally," the
Almanac notes. "Santa's failure to show
Last week, the Dow rose to a three-and-a-half-year high, and the S&P 500 moved above the 1200 level for the first time since August 2001, as oil prices declined and health care stocks like Pfizer (PFE) stabilized after plunging the week before.Paul Desmond, president of Lowry Research, thinks the momentum is strong enough to carry stocks higher next week and through the first half of January. "As different indexes have broken out to new highs, a lot of institutional investors that have been sitting on the sidelines have been forced back into equities," he said. "There's a strong tendency to realign portfolios before the end of the year, and we think there's going to be strong upward pressure." While Desmond is bullish heading into 2005, he does expect some pullback in mid-January when fourth-quarter earnings and preannouncements are released. Although there are no corporate earnings of note due out next week, a few economic releases are on tap, including a report on consumer confidence for December. Although sentiment readings aren't always closely correlated with consumer spending, traders will look at the data for some insight into the holiday shopping season, which has been underwhelming so far.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV