The market completed eight-straight up days in a row on Friday in something I would call more of a Santa Claus Melt-Up than a Santa Claus Rally. What could be causing such unabashed ebullience? Many attribute the rally to the Phase One trade deal, but as I see it the deal is mostly a nothing-burger, although some see it as a truce more than anything else.
I tend to think that the market move is a function of the Fed’s latest round of QE. The chart below, taken from the St. Louis Fed’s website, shows the sudden and rapid increase in the Fed balance sheet that began in early September.
The NASDAQ Composite Index responded in early September with an initial rally, then it rolled over to test the early-August lows. From there, as the Fed further opened up the spigot, the market indexes took off. On Friday, the NASDAQ posted its eighth-straight up day in a narrow range on heavy options expiration volume. The action has the look of high-volume churning, and we’ll see if this has any significance as we move through the Christmas Holiday week.
The rest of this report is available for Gilmo Report Members only.The full report will be available 45 days after it is posted. For immediate access: login
Gil Morales & Company, LLC (“GMC”), 8033 Sunset Boulevard, Suite 830, Los Angeles, California, 90046. GMC is a Registered Investment Adviser. This information is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to GMC, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Gil Morales & Company, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2008-2019 Gil Morales & Company, LLC. All rights reserved.