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We have a short end-of-the-year Global Week Ahead in hand.
Stocks have tended to perform well in the last five trading days of December, and the first two of January, a phenomenon known as the “Santa Claus Rally.” This has lifted equities in 55 out of 74 years since 1945, according to CFRA Research.
This year, the period started on Thursday, Dec. 24th.
- The average Santa Claus rally has boosted the S&P 500 index by +1.3% since 1969, according to the Stock Trader's Almanac
- Overall, a year with a Santa Claus rally is followed by an annual +9.7% average gain the following year
- But despite the S&P’s rally in the fourth quarter and its YTD gain of around +14%, a Santa Claus rally this year is far from given
Concerns over a new variant of the coronavirus, and weak macro readings, have weighed on stocks. The S&P 500 is down -0.7% since hitting record highs on Dec. 17th.
Here is how India’s Economic Times summed the drivers for this Global Week Ahead—
Just ahead are a pair of U.S. Senate races on Tuesday, Jan. 5th. That could tip control of the chamber to Democrats.
More than 1.1 million Georgians have already cast their ballots for the Jan. 5th contests, a level of participation that is on pace to rival the November presidential contest.
Overall, the broad U.S. stock market has focused on the stimulus deal passed by Congress (on Monday) and the rollout of coronavirus vaccines -- rather than increasing political risk.
This year's rally in the S&P 500 pushed its forward price to earnings valuation to 23.1. That is near its highest level in history.
This was done on the back of extensive government stimulus programs and unprecedented monetary support from the Federal Reserve.
Those backstops have left the market priced for perfection, giving it little more room to run without another catalyst.
Top Zacks #1 Rank (STRONG BUY) Stocks
Tesla (TSLA - Free Report) : Yes, the electric car maker is on our #1 list this week. That means the company’s annual forward EPS estimates are rising. This stock is priced to perfection, and then some. The stock’s 5 to 1 post-split price is an eye-watering $662. The market cap is $627B. I see an obvious Zacks Value score of F, coming along with a Zacks Growth score of A, and a Momentum score of B.
JP Morgan Chase (JPM - Free Report) : The big U.S. bank. I see a share price of $124 and a market cap of $379.5B. I also note a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of B.
FedEx Corp. (FDX - Free Report) : This is the air freight courier. I see a share price of $268, making a market cap of $71.2B. I also note a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
Key Global Macro
On Monday, it is a Boxing Day holiday in the U.K. and Canada.
On Tuesday, the S&P/Case-Shiller Home Price Index for October comes out. +6.9% y/y gains are expected. This has been a strong price year for single family housing.
On Wednesday, the U.K. Parliament will vote on Brexit.
On Thursday, U.S. initial jobless claims will get scrutiny, with the fresh lockdowns and rising case counts. The 4-week average is 818K. The week to Dec. 25th should show 803K.
European markets close for trading on this day.
Friday is New Year’s Day.
U.S. trading of stocks will be closed on Friday.
Conclusion
We will close out 2020 in the Global Week Ahead. The annual average S&P 500 index return, from its inception in 1926 through 2018, is +10% to +11%.
Want to guess what Tesla’s individual share price gains for 2020 were?
YTD returns are at +690%!
That annual Tesla share return was eclipsed by a few penny stock performances, ones that marketed successfully to the euphoria. Electric vehicle maker upstart Nio delivered a +1,039% YTD gain (its 52-week range is $2.11 to $57.20). Hydrogen Fuel Cell upstart Plug Power produced a +1,025% YTD gain (its 52-week range is $2.53 to $37.11.)
I personally find the tactic of selling publicly-listed stock to people -- before you build a successful business model, a profitable, growing company -- worrisome.
I guess believing in something that isn’t really here is the essence of Santa Claus.
There were a couple (mind-boggling) 2020 share returns stories and business models I can appreciate.
Consider Enphase Energy (ENPH - Free Report) . This stock delivered a +594% YTD gain. The company builds a semiconductor-based microinverter system. That system converts direct current electricity to alternating current electricity at the individual solar module level.
Finally, video-conference provider Zoom (ZM - Free Report) came in with a +451% YTD gain.
Still. How soon do big incumbents take back market share from these two companies?
Does anyone want to guess what major stock tickers will have the best returns in 2021?
Have a great trading week.
And a quiet and safe holiday!
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Image: Bigstock
A Santa Claus Rally? Global Week Ahead
We have a short end-of-the-year Global Week Ahead in hand.
Stocks have tended to perform well in the last five trading days of December, and the first two of January, a phenomenon known as the “Santa Claus Rally.” This has lifted equities in 55 out of 74 years since 1945, according to CFRA Research.
This year, the period started on Thursday, Dec. 24th.
Concerns over a new variant of the coronavirus, and weak macro readings, have weighed on stocks. The S&P 500 is down -0.7% since hitting record highs on Dec. 17th.
Here is how India’s Economic Times summed the drivers for this Global Week Ahead—
Just ahead are a pair of U.S. Senate races on Tuesday, Jan. 5th. That could tip control of the chamber to Democrats.
More than 1.1 million Georgians have already cast their ballots for the Jan. 5th contests, a level of participation that is on pace to rival the November presidential contest.
Overall, the broad U.S. stock market has focused on the stimulus deal passed by Congress (on Monday) and the rollout of coronavirus vaccines -- rather than increasing political risk.
This year's rally in the S&P 500 pushed its forward price to earnings valuation to 23.1. That is near its highest level in history.
This was done on the back of extensive government stimulus programs and unprecedented monetary support from the Federal Reserve.
Those backstops have left the market priced for perfection, giving it little more room to run without another catalyst.
Top Zacks #1 Rank (STRONG BUY) Stocks
Tesla (TSLA - Free Report) : Yes, the electric car maker is on our #1 list this week. That means the company’s annual forward EPS estimates are rising. This stock is priced to perfection, and then some. The stock’s 5 to 1 post-split price is an eye-watering $662. The market cap is $627B. I see an obvious Zacks Value score of F, coming along with a Zacks Growth score of A, and a Momentum score of B.
JP Morgan Chase (JPM - Free Report) : The big U.S. bank. I see a share price of $124 and a market cap of $379.5B. I also note a Zacks Value score of F, a Zacks Growth score of F, and a Zacks Momentum score of B.
FedEx Corp. (FDX - Free Report) : This is the air freight courier. I see a share price of $268, making a market cap of $71.2B. I also note a Zacks Value score of B, a Zacks Growth score of A, and a Zacks Momentum score of A.
Key Global Macro
On Monday, it is a Boxing Day holiday in the U.K. and Canada.
On Tuesday, the S&P/Case-Shiller Home Price Index for October comes out. +6.9% y/y gains are expected. This has been a strong price year for single family housing.
On Wednesday, the U.K. Parliament will vote on Brexit.
On Thursday, U.S. initial jobless claims will get scrutiny, with the fresh lockdowns and rising case counts. The 4-week average is 818K. The week to Dec. 25th should show 803K.
European markets close for trading on this day.
Friday is New Year’s Day.
U.S. trading of stocks will be closed on Friday.
Conclusion
We will close out 2020 in the Global Week Ahead. The annual average S&P 500 index return, from its inception in 1926 through 2018, is +10% to +11%.
Want to guess what Tesla’s individual share price gains for 2020 were?
YTD returns are at +690%!
That annual Tesla share return was eclipsed by a few penny stock performances, ones that marketed successfully to the euphoria. Electric vehicle maker upstart Nio delivered a +1,039% YTD gain (its 52-week range is $2.11 to $57.20). Hydrogen Fuel Cell upstart Plug Power produced a +1,025% YTD gain (its 52-week range is $2.53 to $37.11.)
I personally find the tactic of selling publicly-listed stock to people -- before you build a successful business model, a profitable, growing company -- worrisome.
I guess believing in something that isn’t really here is the essence of Santa Claus.
There were a couple (mind-boggling) 2020 share returns stories and business models I can appreciate.
Consider Enphase Energy (ENPH - Free Report) . This stock delivered a +594% YTD gain. The company builds a semiconductor-based microinverter system. That system converts direct current electricity to alternating current electricity at the individual solar module level.
Finally, video-conference provider Zoom (ZM - Free Report) came in with a +451% YTD gain.
Still. How soon do big incumbents take back market share from these two companies?
Does anyone want to guess what major stock tickers will have the best returns in 2021?
Have a great trading week.
And a quiet and safe holiday!
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>