The S&P500 broke yet another record this year as Santa’s rally seemed to kick in. Buyers stepped into the market after Monday initially began with heavy selling. This allowed the index to bounce off trend line support, and it could now be set up for breakout after finally closing above $4700.
However, the recent rally comes on the back of lower trading volume, potentially poking holes in its legitimacy. Thursday’s PCE inflation data might act as an early confirmation of Fed’s raising interest rates in March, and when coupled with a slowdown in consumer spending, investors could be looking to take profits at the current level.
Will this be the start of another leg higher, or is it simply a bit of optimism before Christmas?
All trading carries risk, but this could be one to keep an eye on heading into the new year.