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The S&P 500 is known to kick off the so-called Santa Claus rally during this week, and it looks like that has held true. The S&P 500 remains strong as we are seeing more gains on Monday. With that being said, we are looking to the 6,900 level and breaking that opens up the possibility of a fresh new high at 6,933. Anything above there opens up the door to the 7,000 level, which is where I think we're going eventually anyway.
It has been a very choppy market as of late, but we are starting to squeeze higher, and the first hint of course was that we stabilized near the 50-day EMA despite the fact that we broke down below the 6,800 level, an area that I thought would be very important.
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Keep in mind that liquidity and, for that matter, interest in the market is going to drop off later this week as we head towards Christmas, but the S&P 500 is known to kick off the so-called Santa Claus rally during this week, and it looks like that has held true. It may have started on Thursday of last week.
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Ultimately, I do think that a lot of people are looking forward to the Fed cutting rates and the possibility that maybe some of the leading data in the United States is stronger than people anticipated. If that is in fact the reality, it makes sense that the S&P 500 as a market on the whole will go higher.
Keep in mind that it is driven by a handful of companies; it's not an equal-weighted index, so you have to watch all the usual suspects in this scenario but certainly looks to me like if the S&P 500 does decide to pull back a bit, you probably want to get involved. After all, we've been straight up in the air and then very reliable since April. There's been a couple of hiccups along the way, but there's a clear winner as far as momentum is concerned.
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