First, historically there has been a rally on Wall Street during the final days of the year, a Santa rally. People like traditions and with stocks priced at "bargain basement" prices this is a distinct possibility.
Second, investors are starting to get their minds wrapped around the severity of the recession and they are simultaneously seeing that measures are being formulated to spark the economy. Investors are still trying to get a sense of the bottom, and so far there has been a tiny price recovery since November 20 when everything fell through the floor. The question remains, was November 20 the bottom.
Third, there is more data coming out this week on housing. Housing is a key indicator and the direction of the recession will be very clear. Unfortunately improving will not be on the menu, but slowing down the downward trend might be.
On a personal note, we are trying our best, we are buying a new house this week, so recession be damned.
Reuters: Stocks hope Santa can brighten dark year
Santa's appearance has been good for an average 1.5 percent gain since 1969, according to the Almanac, while a failure to see such a rally tends to precede times in which stocks can be purchased later in the year at much lower prices.
Optimism over President-elect Barack Obama's proposed stimulus plan has added to the more positive tone, helping the market rally in the face of an onslaught of dire economic and corporate outlooks.
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