The Peter Shifts Show

Well it looks like the Grinch may not have been able to stop Christmas from coming to Wall Street.

It looks like the Santa Claus rally came just the same or did it.

You know the worst Christmas Eve in the history of the stock market was followed by the biggest boxing day

rally in the history of the stock market.

Now we don't celebrate boxing day here in the United States.

All the other English speaking nations celebrate that holiday but it never came to America.

But maybe we'll celebrate it in the future given the fact that the Dow Jones rallied over 1000 points this boxing day.

And so that more than eradicated the 650 point drop which was the biggest Christmas Eve drop in history.

And if you recall on my last podcast I mentioned that following Christmas Eve's drop the December was the worst December in stock market history.

We had finally beaten out the 1931 December but I also mentioned that given the extreme oversold condition that existed in the market that it was possible that a bounce could come at any minute.

And so or any day and I was not sure whether or not we would actually finish as the worst December in the history of the stock market because we could have gotten a rally.

We still had several trading days left for the market to bounce and that is exactly what happened.

In fact we managed to close positive on the week where I think the Dow finished up about 617 points.

Now of course we still have one more day for the Grinch to have another change of heart because if on Monday the Dow is down more than 617 points which given the volatility that we're seeing is going to be easy to do especially since we are no longer oversold to the extent that we were on Tuesday.

And the Grinch may end up stealing this Santa Claus rally anyway so we'll just have to wait until Monday to find out but the volatility is incredible not just the thousand point record move on Tuesday percentage wise obviously not a record but point wise it is a record.

But probably as even more spectacular maybe than that rise was Thursday's 900 point reversal in the final 90 minutes trading because yesterday at one point the Dow was down about 550 points 600 points and then a rally positive all of it in the last 90 minutes of trading a little bit of volatility today I mean nothing compared yesterday we were up and down in the morning.

I think going into the last hour the Dow was up about 200 points I think the high was up about 252 60 and then it sold off in the last hour to negative 155 or so before the Dow managed to lose about 70 points so about a 350 point last hour sell off which again small compared to the 900 point rally from the previous day but a lot of volatility.

But you know as I said on several podcasts before the most spectacular rallies generally occur during bear markets now sometimes they occur at the peak of a bull market kind of in the blow off phase but they are very typical in a bear market to get a sharp rally and the purpose of these rallies is to raise a false sense of confidence of complacency to keep the frogs in the past.

Pan you know as the water boils you know getting people to have hope that the market is bottom that in fact that's exactly what's happened if you look at the conventional coverage in the financial media lots of people now believe that the bull market is over in fact a lot of people are now saying that I wasn't even a bear market because technically the S.A.P. closed not you know 19.99 or something below its peak close we avoided a bear market so it's still a bull market yet it's.

Wistful thinking hope springs eternal nowhere is that statement more true than in a bear market but that is what we have bear market and you know to me if you look at the charts this rally did nothing in fact you know this was the only up week for the month of December and it's still still the worst December since 1931 including the rally that we have this week.

I think one of the catalyst for that Tuesday rally was the report I think that came out early in the day by master card that Christmas spending was up rather substantially maybe was 5% I forget the exact number from the prior year so it looked like it was going to be a very strong Christmas and it's possible that there were some people that were nervous about this holiday spending and maybe it would be a week Christmas so I think the the news that consumers are out there charging stuff.

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