Is Is Is

Is Santa Claus not coming to the market this year?

Equity 6 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank Group

In this Technical Update we'll have a look at S&P 500/US500, Nasdaq100/USNAS100, Russell 2000, DAX and OMX C25

With the depressed Equities market of late maybe the Santa Claus is not visiting the Exchanges this year. 
The Santa Claus rally is an event where Equity market is having short sweet rally starting just before Christmas lasting until first few trading days of the new year. Will Santa not visit this year? 
With the past couple of day's negative markets there is a risk. If we do not see a Santa Claus rally it historically spells trouble for the new year. 
Looking at the various Indices there is some indications that he might not come around this year. But jury is still out. 

Friday S&P 500 closed below the short term support at around 4.631 and followed that up with a gap yesterday testing the short term rising trend line. Another push below and we could see the leading US Index test the 4.495 support which could be crucial for a bull/bear scenario. A close below could fuel a sell off down to around 4.400-4.300.
This potential bearish scenario has been in the making for some time. Divergence on RSI has indicated that the uptrend was nearing its end.

Source: Saxo Group

The S&P 500 future/US500 CFD has continued the bounced from the closing session yesterday. If it can close above 4.630 there is a chance for a small year end rally.  

 

Source: Saxo Group

Nasdaq 100 is desperately trying to hold on to the bullish scenario but seems to be failing. It closed below the support at around 15.638. However, despite RSI showing divergence in November is hasn’t yet broken below 40 threshold which would indicate bearish sentiment.
Was it just a false break and can bulls push the Index back above 15.638. Next few days could be decisive.

Source: Saxo Group

Nasdaq100 future/USNAS100 CFD closed above its support at around 15.540 and is bouncing a bit further this morning.
Interesting to see if it can claw its way back above the 16K which could lead to a small year end rally. 
A close below support at around 15.540 could lead to a sell-off down to around 15.000-14.500.

Source: Saxo Bank

Last week I mentioned the Small cap index Russell 2000 was likely the leading indicator for the overall stock market. It is still holding on above its support at around 2.130. The support seems to be crucial for Bull/Bear scenario to play out.

Source: Saxo Bank

DAX found support at 15.100. the rebound from here seems to continue today at the opening but is fading at bit after a few hours of trading. If DAX closes below yesterday’s close at 15.239 we could see a new attempt to break the 15.100 support. A close below the support will confirm a bearish trend and the Index is likely to test 14.804 support.
RSI and MACD are both bearish and if we see RSI back below 40 there is a strong indication the 15.100 support will come under massive pressure.
For DAX to reverse the likely bearish scenario to play out a close above 15.780 is needed.

Source: Saxo Bank

I don’t often write about the Danish Equity market but since I have given an interview to the Danish finance newspaper Børsen about OMX C25, here are the main point:

1.800 is the support to look out for in OMX C25. A close below the support will confirm a down trend. Adding to that, with the bounce at the end of the session yesterday and today being back above 200 SMA the Index is showing resilience to Bears i.e. the Index seems to be range bound between 1.800 and 1.950.

Source: Saxo Bank

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)

Saxo Markets
40 Bank Street, 26th floor
E14 5DA
London
United Kingdom

Support Centre
For existing clients, please click here to request support via the Support Centre.

Have a question about our products, platforms or services? Visit the Support Centre to find answers for our most frequently asked questions. If you are still unable to locate an answer to your question, you will also find contact details for your local Saxo office to speak with a representative.

Contact Saxo

Select region

United Kingdom
United Kingdom

Trade Responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more
Additional Key Information Documents are available in our trading platform.

Saxo Markets is a registered Trading Name of Saxo Capital Markets UK Ltd (‘SCML’). SCML is authorised and regulated by the Financial Conduct Authority, Firm Reference Number 551422. Registered address: 26th Floor, 40 Bank Street, Canary Wharf, London E14 5DA. Company number 7413871.

This website, including the information and materials contained in it, are not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in the United States, Belgium or any other jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation.

It is important that you understand that with investments, your capital is at risk. Past performance is not a guide to future performance. It is your responsibility to ensure that you make an informed decision about whether or not to invest with us. If you are still unsure if investing is right for you, please seek independent advice. Saxo Markets assumes no liability for any loss sustained from trading in accordance with a recommendation.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the U.S. and other countries. App Store is a service mark of Apple Inc. Android is a trademark of Google Inc.