The Santa Claus Rally! | 30 December 2022

#SP500:

The season for the Santa Claus Rally! This unique seasonal pattern was first discovered by Yale Hirsch in 1972. Given the challenging year for U.S. equity markets, including what could be one of the worst Decembers for the S&P 500 since 1950, traders are hoping Santa can deliver some positive returns and holiday cheer as we approach year-end. S&P 500 has generated average returns of 1.3% during the Santa Claus Rally period, compared to only a 0.2% average return for all rolling seven-day returns. If the S&P 500 finishes higher during this year’s Santa Claus Rally, it would mark the seventh consecutive period of positive returns. The longest streak was 10 back in the mid-1960s. However, positive returns during the Santa Claus Rally are relatively common, as the market has advanced 79% of the time during this period.

Trading recommendation: range 3775 - 3975.

XAUUSD:

The University of Michigan Surveys of Consumers said the one-year inflation outlook, released alongside its bi-monthly reading of overall consumer sentiment, fell to 4.4% this month from a final reading of 4.9% in November and from a preliminary 4.6% reading two weeks ago. That was the lowest since June 2021 and was the half-percentage-point drop in near-term inflation expectations from November was the largest since September 2020. At the five-year horizon, the outlook moderated to 2.9% from 3.0% last month and earlier in December. This is a positive signal for the precious metals market.

Trading recommendation: buy 1785 and take profit 1819.

#WTI:

Russian said it would cut crude output in response to the G7 price cap on Russian exports. Moscow may cut oil output by 5% to 7% in early 2023 as it responds to price caps, the cited Deputy Prime Minister Alexander Novak as saying. Russia's Baltic oil exports could fall by 20% in December from the previous month after the European Union and G7 nations-imposed sanctions and a price cap on Russian crude from Dec. 5, according to traders. The potential cut from Russia could be giving the bulls more fuel. The road for higher prices will however stay bumpy.

Trading recommendation: buy 78.70 and take profit 81.90