The technical bounce that’s ready to drive the S&P 500 back to 2,700


The markets have enough to worry about these days, right?

With major U.S. indexes in or near bear territory, a government shutdown under way and the White House falling over itself to assure us no one is firing Fed Chief Powell, Treasury Secretary Steven Mnuchin gobsmacked market participants by revealing that he made a weekend call from a beach in Mexico to the country’s six biggest banks, presumably to assure Wall Street that there’s ample liquidity sloshing around in the financial system.

He then tweeted the whole thing, and jaws are still hitting the floor:

“Sure, late-cycle jitters are proliferating and yes, investor demand is waning for risky loans (as evidenced by some banks getting stuck holding on to M&A debt), but nobody that I’m aware of was worried about a Lehman-esque systemic seizure,” until now, wrote the anonymous blogger behind the Heisenberg Report.

Mnuchin has also convened a meeting of the so-called Working Group on Financial Matters for Monday, so more tweets could be on the way. Can any of this help stocks break the curse that has seen markets rally early trade only to run into a wall of sellers later.

It’s a shortened Christmas Eve session with big players likely out on vacation until after New Year’s, so watch for meager volume and outsize swings. As opposed the usually scheduled program of big volume and big swings.

Our call of the day delivers some holiday cheer by stepping away from grinch-like calls. From the Kobeissi Letter comes the prediction that a technical bounce that could drive this market right back to 2,700 glory. It has to do with the S&P 500 crossing below the so-called Bollinger Band, which measures market volatility and strong moves headed one way or another.

The S&P 500 has been hanging onto support has at 2,400, notes Adam Kobeissi, founder and editor in chief of The Kobeissi Letter. “The S&P 500 has also crossed 97 points below the Bottom Bollinger Band, which has only happened two previous times on the weekly three-year chart. The last two times this happened, the index rallied 15% and 21.5%, respectively.”

Kobessi says they expect a move back to 2,700 as “equities have dropped far too quickly,” and expects support to be found at 2,450 this week, then 2,500 on the way up. He sees a one-month technical bounce that should give investors a better view on the economic data and global conditions.

So who’s game to go back in? Try pension funds who have just a few sessions to rebalance. They need to sell bonds to buy $64 billion in equities, according to Wells Fargo (h/t ZeroHedge).

Read: As stocks suffer a December rout, Wall Street strategists bet on 2019 gains

Last word goes to us: happy holidays and thanks for reading.

The market


YMH9, -0.80%

S&P 500

ESH9, -0.76%

 and Nasdaq

NQH9, -0.80%

 futures are up for now. That’s after heavy selling Friday and the worst weekly drop since the 2008 financial crisis for the Dow

DJIA, -1.81%

 and Nasdaq

COMP, -2.99%

and the worst five-day run for the S&P 500

SPX, -2.06%

 since 2011.

Read: This brutal stock-market rout mirrors the 1987 crash in one important way

The yield on 10-year Treasury notes

TMUBMUSD10Y, -0.74%

 is off a bit to 2.781%. The dollar

DXY, -0.18%

and crude


are down, while gold


is up.

Europe stocks

SXXP, -0.53%

 aren’t having any of Wall Street’s positive vibes. Asia

ADOW, -0.16%

minus the Nikkei, had a mixed day of trading.

The chart

Hedge funds are loving gold lately. Our chart of the day comes from Die Welt’s Holger Zchaepitz, whose chart shows how those funds have increased their bets on the shiny stuff, in reaction to headwinds popping up for stocks:

The buzz

White House advisers scrambled over the weekend to assure everyone that President Donald Trump won’t be firing Fed Chair Jerome Powell, with incoming Chief of Staff Mick Mulvaney saying POTUS “realizes” he can’t ax the central bank boss, and Mnuchin saying the commander in chief never even raised the idea. In any case, here’s why POTUS couldn’t even if he wanted to.

Defense Secretary Jim Mattis will be out the door two months earlier, after a series of POTUS tweets questioning why he was ever hired in the first place. That’s after reports Brett McGurk, a top envoy in the war against ISIS, quit.

And the shutdown, which began at midnight Friday, looks set to drag into the new year, Mulvaney also said in that interview.

Indonesia’s Sunda Strait is digging out after a tsunami struck Saturday evening, leaving more than 200 dead and dozens missing. Volcanic activity is thought to have spurred that disaster, with fears of another tsunami, as the Anak Krakatau erupted again Sunday. One video making the rounds shows waves crashing down on the concert of pop band Seventeen. The lead singer posted an emotional tribute on Instagram to pray for his wife and other band members who remain missing.

The economy

The Chicago Fed’s activity index is the only economic piece of data due ahead of Christmas, but the rest of the week will give us Case-Shiller home prices, weekly jobless claims, and a couple of indicators on home sales.

The stat

$511 billion — That’s how much the wealthiest people in the world lost in 2018, according to Bloomberg’s Billionaires Index. The net worth of the 500 individuals on that list fell to $4.7 trillion Friday, from $5.6 trillion, marking the second time the index has seen an annual fall since it began in 2012. Facebook’s

FB, -6.33%

 Mark Zuckerberg saw the biggest loss as his fortune dropped $23 billion.

Meanwhile, only 34% of America’s millionaires say they’d vote for Trump again, down from 45% in 2017.

Random reads

Toys R’ US demise has been bad news for Toys for Tots

Astronaut says it’s “stupid” to send anyone to Mars

Medical miracle as 11-year old girl’s brain tumor disappears

2018 was a year for the “Old Boy”

Last week’s Gatwick mess may not have been due to drones at all

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Source : MTV