The holiday week is here. Looks like a Santa Claus ralley is already in effect, but what is this ralley.
A Santa Claus rally is a calendar effect that involves a rise in stock prices during the last 5 trading days in December and the first 2 trading days in the following January. According to the 2019 Stock Trader’s Almanac, the stock market has risen 1.3% on average during the 7 trading days in question since both 1950 and 1969.
Happy Monday. Good Luck out there this week.
Global Spotlight
Next Week: Representatives of Russia’s Gazprom and Ukraine’s Naftogaz will work over the weekend and possibly into next week as they try to hash out details of a preliminary gas transit agreement they reached on Dec. 19.
Dec. 23: Argentina will miss a $410 million bond payment that it wants creditors to roll over.
Dec. 24: The leaders of Japan and South Korea will meet on the sidelines of a trilateral summit with China in Chengdu.
Dec. 25: With North Korea’s exit from U.S. outreach and resumption of testing increasingly likely, statements out of Pyongyang have alluded to a “Christmas present” for the United States.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
Briefing.com
Last Weeks Numbers
First let’s look at the action during the week. A gap up over the weekend and no real test of that Gap Fill. then a second gap from Thursday to Friday. This is the beginning of the Santa Claus Rally.
source: Money.net
Review Last weeks numbers here.
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- Third quarter earnings are expected to decrease 0.4% from 18Q3. Excluding the energy sector, the earnings growth estimate is 2.2%.
- Of the 499 companies in the S&P 500 that have reported earnings to date for 19Q3, 75.2% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 74%.
- 19Q3 revenue is expected to increase 3.8% from 18Q3. Excluding the energy sector, the growth estimate is 5.2%.
- 57.7% of companies have reported 19Q3 revenue above analyst expectations. This compares to a long-term average of 60% and an average over the past four quarters of 59%.
- For 19Q4, there have been 73 negative EPS preannouncements issued by S&P 500 corporations compared to 35 positive, which results in an N/P ratio of 2.1 for the S&P 500 Index.
- The forward four-quarter (19Q4 –20Q3) P/E ratio for the S&P 500 is 18.7.
- During the week of Dec. 23, no S&P 500 companies are expected to report quarterly earnings.
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