As may have been expected, it was a fairly slow week in the broad market S&P last week. Volume was significantly lower than usual and this led to some fun swings but nothing that ultimately stuck as it ended the week more or less flat. This did not stop tech from getting hammered again this week though. Apple (AAPL) and Tesla (TSLA) took the brunt of it being down 1.97% and 18% respectively. Many of the other large tech names ended the week more or less flat with small variations in opening prices.
This week should prove to be more of the same as the World celebrates the Christmas Holiday and most banks are closed at least Monday. The shortened week is often a good time not to trade if you can help it, however if you will be participating in the markets here are a few things to watch this week:
Volume
Much like every other week in December, volume has the potential to be an issue. This week could be especially bad with most big banks sitting out until the first of next year. Retail investors will most likely make up the majority of the money flows so wide swings and low volume moves could be the norm.
Bank Holidays
With Christmas being this weekend, all major banks and exchanges are closed on Monday. Many of the EU banks are also closed Tuesday as they will observe boxing day on Monday and Christmas day on Tuesday. Monday will be a non-issue since no one can trade, but Tuesday could see even slower than usual action with a few of the banks still closed for holidays.
Pending Home Sales
Wednesday once everything is back open there are pending home sales coming out in the US. Usually this has potential to be a mover, especially with the recent focus on overall economic health, but with banks being closed Monday and it being a short week it is possible that not much happens with the report.
US Unemployment claims
Last week's claims came in better than anticipated showing the Fed that they are not yet successful in slowing down the economy. It's possible that if this comes out better then expected as well it could be seen as a negative by the limited players in the market. Another better than expected report could signal that more aggressive rate hikes are still needed and that has historically been a bad thing for the equities markets.
Chicago PMI
Another report that measures broader economic activity is the Chicago PMI. Estimated to show a slight improvement over last month, it could have a similar reaction as the unemployment claims. Any resilience could be construed as fed policy that is not working and could be seen as a bearish report. It's possible that we are entering into a regime of “Good news is bad” in the general markets. The other factor to consider, as discussed above, is the lower the usual volume. It's possible that this has an exaggerated effect on any news that comes out this week.
One Final note: Merry Christmas and Happy Holidays! Also, don’t forget to check out my daily options article.
More Stock Market News from Barchart
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On the date of publication, Gavin McMaster did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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