This is the last week before Christmas and Santa rally could continue towards the end of the year by pushing the stocks up towards their record high. Usually a strong finish does mean that we could have a strong January and we do have a famous saying which means if the month of January is strong, odds are stacked in favor for a robust year. However, this was not the case year, as we had a rough month of January, but we are about to end at another record high.
But, it is important for traders to pay attention towards the significance of the economic data which is due next week. A disheartening reading of the the Chinese PMI which is due on the 30th of December, could very well trigger profit trading. Volume is also expected to stay immensely low during the holiday period with not enough liquidity as most traders are on their Christmas break. Our terminals are also supporting the view that traders are not participating as much and more focused towards their Christmas shopping perhaps.
Oil
Gulf countries have once again made this clear that it is by no means their miscue that the oil price has dropped so much due to the presence of over supply in the market and have pointed their fingers to non OPEC countries flooding the oil market with extra supply. Obviously, the prominent culprit according to them is the US, which has produced a record oil during the month of November. The OPEC members have shown their energetic enthusiasm in cutting the oil supply but only on the condition of the non OPEC members do also follow their lead. This is supreme acumen for the upward move of oil from its 5 year low. However, if there is no follow through on this, we could see the oil price falling to the support of 50 dollars in no time.
Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.