The Final Stretch - Mott & Associates

The Final Stretch

It looks like the stock market got a shot of holiday cheer as major U.S. indexes logged better than 3% gains last week. The Dow is now up 6% for the year, and the S&P 500 is back in positive territory. While many were calling for a so-called “Santa Claus rally,” others were concerned that fears surrounding Europe’s situation would continue to be a drag on the markets.[1] Last week however, Europe’s troubles were of little account as stocks rallied to their third weekly gain in four after Congress approved an extension of the payroll tax cut to ensure taxes won’t increase on January 1.[2] In addition, tentative signs of improvement seen in government reports on personal spending, income, and housing, all helped boost equity markets last week.[3]

What’s in store for the week ahead? With Wall Street closed for business on Monday, a number of major players on vacation, and few economic reports expected, trading volume will probably be light. Even so, there is something interesting we would like to share with you. According to the Stock Trader’s Almanac, the five trading days before January 1, and the two trading days that follow, typically generate abnormally high returns, yielding positive returns in 31 of the last 41 holiday seasons.[4] Of course, past performance cannot be relied upon to predict future results, and other factors must be considered, but the trend is worth noting.

While many investors have already closed their books for the year, we head into the final stretch eager to end 2011 in the black. Regardless of what happens during the final four trading days of the year though, we encourage you to take comfort in knowing that we will keep an eye on things for you. Again we urge you to relax and enjoy some well-deserved time with your family and friends.

Stay tuned for our annual recap due next week!

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The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.

The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The DJIA was invented by Charles Dow back in 1896.

The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) that serves as a benchmark of the performance in major international equity markets as represented by 21 major MSCI indexes from Europe, Australia and Southeast Asia.

The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

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[1] http://www.marketwatch.com/story/us-stocks-look-to-keep-holiday-rise-alive-2011-12-24
[2] http://money.cnn.com/2011/12/23/markets/markets_newyork/index.htm?iid=HP_LN
[3] http://www.bloomberg.com/news/2011-12-23/u-s-november-personal-income-and-spending-text-.html
[4] http://www.stocktradersalmanac.com/
[5] http://www.bloomberg.com/news/2011-12-23/oil-has-biggest-weekly-gain-in-two-months-commodities-at-close.html
[6] http://money.cnn.com/2011/12/23/news/economy/minimum_wage_increases/index.htm?iid=HP_LN
[7] http://www.dailyfinance.com/2011/12/22/u-s-retirement-assets-declined-by-1-4-trillion/
[8] http://money.cnn.com/2011/12/21/pf/holiday_money_returns/index.htm?iid=HP_LN
[9] http://www.boston.com/lifestyle/food/gallery/healthtips?pg=2
[10] http://www.thedailygreen.com/environmental-news/latest/green-new-years-resolutions-10109