Mish's Market Minute

Is the Santa Claus Rally Finally Here?

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As the year nears its end, we have a lot of ideas to keep watch of.

Tuesday's price action could be the late Santa rally people were hoping for. Though it's better late than never, we should watch for the major indices to hold up through Thursday, since the trading week is going to be cut short with the market closing Friday. With that said, let's look at some ideas that are setting up this week and into the coming year.

One space to look at is crypto, which is currently showing consolidative price action within the large-cap coins, like Ethereum and Bitcoin. However, if cryptocurrencies begin to rally, we can watch for Hut 8 Mining (HUT) to do the same, as it's a large holder of self-mined bitcoin. Currently, HUT has come back through the 200-day moving average at $7.63. If it can hold over this price level, we can look for a quick rally from the lows.

Another interesting pick is Coty (COTY) which focuses on consumer beauty products. COTY is interesting not only from its daily break over the 10-DMA, but for its recent bullish phase change and potential long-term trend change on the weekly chart.

If COTY can hold its 200-week moving average, as seen in the above chart, it will show that it's setting up on multiple time frames. Additionally, using our proprietary Real Motion indicator, we see COTY is holding over its 50-DMA on momentum as well.

On a daily timeframe, D.R Horton (DHI) has also made a recent bullish phase change and a quick reversal from Monday's low. The Homebuilding and Mortgage company has the potential to increase production as homebuilding prices begin to normalize in 2022, which makes this a long-term play if it continues through highs.

With that said, we need to remember that price action in the market is currently more volatile and, though Tuesday was a large green day for the major indices, we must be careful of overhead resistance.


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ETF Summary

  • S&P 500 (SPY): 470 resistance area.
  • Russell 2000 (IWM): 224 resistance.
  • Dow (DIA): 360 resistance.
  • Nasdaq (QQQ): Watching for second close over the 50-DMA at 387.99.
  • KRE (Regional Banks): Watching for 67.25 as new support.
  • SMH (Semiconductors): 288.14 new support.
  • IYT (Transportation): 258.53 new support.
  • IBB (Biotechnology): Needs to clear 155.
  • XRT (Retail): 83.54 new support.


Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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