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Santa Claus Rally Continues

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Santa Claus Rally Continues

Stocks in the US started the trading on a soft note after notching up gains each day this week. The US markets were buoyed by gains in Asian as Japan reported better than expected retail sales data and climbing inflation, as the yen continued to weaken driving the Nikkei to multi-year highs. The labor department reported that more than a million people could lose unemployment benefits next week, as their 99 week allowance ends.

The labor department reported that an estimated 1.3 million people are set to lose extended unemployment benefits when funding for those benefits runs out at the end of this week. Since 2008, the federal government has provided money to those who are without a job for longer than 26 weeks and for up to 99 weeks. This would reduce the overall number of claims.

Japan continues report that inflation is on the rise. Japanese November core inflation rose to a five-year high in November, increasing to 1.2% from 0.9% in October and topping consensus of 1.1%. CPI is edging closer to the Bank of Japan’s target of 2%. Core consumer prices, which exclude volatile fresh food and energy prices, accelerated to +0.6% last month from +0.3% in October, with the November gain the biggest in 15 years.

In corporate news, Textron (NYSE:TXT) has agreed to acquire formerly bankrupt Beechcraft for $1.4 billion in a deal that will add the latter’s small propeller-driven aircraft to a Textron portfolio that includes Cessna planes and Bell helicopters.

The technical picture for stocks is strong. The MACD on all three major indices has generated a buy signal this week as the spread (the 12-day moving average minus the 26-day moving average) has crossed above the 9-day moving average of the spread. Stocks should continue the Santa Claus rally into next week.

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Iron FX 1.11156/1.11128 2.8
XM Markets 1.09948/1.09928 2
FxPro 1.10184/1.10171 1.3
FXCM 1.13943/1.13912 3.1