Christmas
is just outside the door and investors are waiting for Santa Claus to be
generous. And they are going to be rewarded as a Santa rally is coming.
Omicron
variant risks are waning. South Africa, which was the first country to report
omicron variant cases, now sees mild infections related to it. Pfizer and
Moderna are going to adjust their vaccines to the new variant and are
delivering new medications to treat COVID-19, including the Omicron cases.
The United
States has reported slightly better than previously GDP growth in the Q3 2021, and
the Core PCE prices index fell to 4.6% in Q3 against 6.1% in the previous
quarter. U.S. President Joe Biden and his over-the-pond closest ally Boris
Johnson said no lockdowns, or any other restrictions are going to be set before
Christmas. What more is needed to flag Santa to begin the rally in the last
seven days of 2021? Statistically, in 77% of cases a Santa rally begins a week
before the New Year and adds some 2-2.5% to the S&P 500 broad market index
within the last week of the year and the next two trading days of the new year.
This rally may even start today with a target of 4800-4850 points.
The technical
picture does not support this idea, but neither is it against the rise of the S&P
500 index to 4730 points this week. Such small gains from the current 4710
points may not seem essential, but they would importantly justify Santa’s intentions
to give the rally to 4800 points and above a go.
Brent crude
prices hit the ceiling at $75.60 per barrel on Wednesday and ran out of steam.
Declining omicron-variant risks, better than expected economic recovery, and
falling oil inventories in the United States pushed prices to the limit. There
is a possibility for Brent crude to move upwards to $76.59 per barrel. But that
would likely create a dead cat bounce that should be used to open sell
positions with the target of $74.00-74.50 per barrel of the Brent crude
benchmark.
Gold prices
have entered a sideways mode around $1800 per troy ounce. Though gold is likely to move to the downside
at $1550-1650 per ounce, such a scenario has limited time to become a reality.
If gold prices remain above $1750 per ounce until January 15 they may resume
the upside movement towards $1830-1850 per ounce in January and February, and
only after reaching it prices would roll back to $1550-1650 per ounce.
The EURUSD is
trying to continue its upside momentum. But in order to do so it needs to close
Thursday above 1.13900-1.14000. No trades should be considered before this
level is breached. The GBPUSD, in contrary, has not only recovered its losses,
but is moving to the upside. The closest targets for the Cable are at
1.36500-1.37500, and this rally is likely to be attended.