The range bound market of December continued Monday as the market gapped up to begin the day and held steady much of the session, finishing near day's highs. Most of the positive energy seemed to be centered around the willingness of Speaker Boehner to compromise on raising taxes, however little. The S&P 500 added 1.19% and the NASDAQ 1.32%. The only economic news was a poor NY Fed survey but that was immediately blamed on Superstorm Sandy.
- Boehner offered $1 trillion in higher tax revenue over 10 years and an increase on the top tax rate for people making $1 million per year, to 39.6 percent from 35 percent.
Helping the NASDAQ was a rally in Apple which came despite some analyst downgrades. As is typical the analyst community - which loved Apple $200 higher - is now acting like typical lemmings and slashing their views as the stock has fallen substantially.
Home building and bank stocks were the leaders of the day, although there was a broad amount of strength. The banks are at a level they have stalled out before, so bulls would like to see the highs of early fall cleared.
The homebuilders have struggled of late, but it seems to be partly based on fears of a partial loss of the mortgage interest deduction during the fiscal cliff talks.
Curious how the market does around Christmas? Bespoke Invest (via Premium) has the answer. You can see generally it is a positive affair (there was an Asian crisis in 2007 and U.S. crisis in 2008)
As shown, the S&P has averaged a gain of 0.78% in the week before Christmas over the last twenty years with positive returns 70% of the time. Throughout the entire history of the S&P 500 going back to 1928, the index has averaged a gain of 0.34% in the week before Christmas with positive returns 64.3% of the time. The index’s historical average over all oneweek periods is 0.15%, so the index has certainly outperformed in the week before Christmas.