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The 6PM Recap With Gary Wagner: Christmas Rally Comes In Lively And Quick

Crude oil bounced up today, surprising everyone with its strength. That buoyed U.S. and European equities.

The big push in crude was due to inventory data. The Energy Information Administration (EIA) said that crude inventories fell by 5.9 million barrels in the last week, compared with analysts’ expectations for an increase of 1.1 million barrels. Crude stocks at the Cushing, Oklahoma delivery hub rose by 2 million barrels, the EIA reported.

Baker Hughes also released data showing U.S. oilrigs falling by three. Oilrigs in the U.S. now total 538, but are nevertheless down by 961 from a year ago.

The Dow Industrials and S&P 500 didn’t care what the reason for the bid up in oil was. Traders took the ball and ran, moving the Dow up about 1.00% and the S&P 500 by 1.25% in late afternoon trading.

Oil may be reflecting some underlying strengths in the American economy today, and ignoring longer-term oversupply issues. At least for now.

The final University of Michigan consumer sentiment survey for December gave us a good, solid middle high reading. The survey was 92.6, up from 91.3 in November.

Durable goods orders went unchanged in November. Non-defense capital goods orders excluding aircraft, a closely watched proxy for business-spending plans, fell 0.4% last month and October’s print was revised to show a smaller rise of 0.6% from the previously reported 1.3% increase. At least that shows that the downtrend is subsiding a little.

U.S. personal income rose a strong 0.3%.

U.S. consumer spending rose by 0.3% last month after holding steady in October, according to figures inadvertently released late today by the Commerce Department. The data was originally due for release at 8:30 a.m. Wednesday.

Gold behaved as one might expect it to against a stronger dollar and a pre-Christmas stock rally in place for the moments.

We won’t call this a Santa Claus rally just yet. We are keeping more in mind the words of Clement Clarke Moore in A Visit From St. Nicholas (‘Twas the night before Christmas).

For our trading purposes, we are keeping in mind the lines:

With a little old driver so lively and quick, I knew in a moment he must be St. Nick

Yes, there is good old Santa Claus, but note that he is little and quick.

In our view, that will be the nature of this year’s end-of-year rally. Better than nothing, we believe.

And we keep in mind, too, the closing line of the revered poem:

“Happy Christmas to all, and to all a good night!”

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Wishing you, as always, good trading,

Gary Wagner