Merry Christmas Eve Morning!

 |  Includes: DIA, QQQ, SPY
by: Philip Davis

For those of you who are trading today, last year Xmas was on a Monday so Friday the 22nd was our last trading day and we dropped about 60 points on low volume but that was a gap down open and we had a good run going into it - that doesn’t look like the case today. Dec 26th had even lower volume and gained it all back and we consolidated through mid-January at around 12,400 from where we broke out to a new high at 12,800 before crashing and burning on 2/27 when the Dow lost almost 500 points in one day (we’ll talk about that in January).

Today we still have all that lovely money sloshing around Europe and our own Government just passed a $500B spending bill so that’s $1T floating around that wasn’t there a week ago, you would think that should give the markets at least a little boost, right?

I went to the mall yesterday as it was raining and the kids needed a run but what a disaster it looked like (from an investors standpoint). Bloomingdales was having a 40% off sale - ahead of Christmas that’s a really bad sign! Another bad sign was the deadness of the jewelry stores and the Disney store was surprisingly spare. Macys was very crowded but they were woefully understaffed and out of too many things for me to think it was due to being busy - more likely it was due to the fact that the retailers have little faith in moving inventory post-holiday.

Despite the sales the buying looked reserved to me and I’m not going to blame Mr. Murdoch yet as it’s Christmas but why is there no mention in the Journal of something that was headlining in China last night - An AP analysis shows a 26% increase in October credit card delinquencies (to $17.3Bn) compared to last year along with a 16% rise in defaults, to $1Bn in October alone. While that may be a drop in the bucket in what is estimated to be $175Bn of outstanding credit balances, that is a pre-holiday number and is very unlikely to improve as consumers stretch themselves to make it through the holidays.

Don’t forget that we are getting through this season with the government, the Fed, Global Central Banks, foreign governments, CNBC, the Fox Financial Network and pretty much every other Fox holding along with most CEOs and the venerable Wall Street Journal telling us how good everything is and how it’s all going to be fine next year and they’ve been so good at it that 87% of US homeowners do not believe their homes will lose ANY value at all next year. Gosh I hope they’re right!

So there’s nothing in the World going on that seems to matter very much this morning as most people know how to take a break for the holidays. Asian markets that were open were well up and the FTSE and CAC are open and up about half a point. MaxJet in Europe filed for bankruptcy and the Queen is making her first YouTube video, which is very fitting as she broke ground 50 years ago with an historic TV broadcast that my English relatives carry as one of those "I remember exactly where I was when" kind of moments.

God bless the Queen and Merry Christmas to you all.