Last week, my tea leaf reading resulted in my call that the gap would fill and then a bounce would ensue. So far, so good. I also noted in my Santa Rally post that the rally would likely start in a few days. It appears that today may mark the start of the rally.
As I write this, SPY is a nickel or so above the 50 day moving average. Should the rally hold, I see no reason why Santa can’t ride us up to the 200 day moving average, or around $126.00. A close near $126.00 would find SPY just better than breakeven for 2011.
Volume looks low so far this morning, but that is somewhat normal for this time of year. Volatility continues to drift lower.
A low volume, lower volatility rally is the hallmark of Santa’s arrival. Indeud, I see SPY has now broken decisively above the 50 day average. Let’s watch for a strong close and re-evaluate volume this evening…