Sad news: Santa Claus may not be coming to town after all. BTIG chief market technician Jonathan Krinsky pointed out that the S & P 500 is trying to hold above its 50-day moving average of about 6,767. The benchmark closed Tuesday trading at 6,800 but hit an intraday low of about 6,760. “It was about a month ago when SPX had gone ~7 months without closing below its 50 DMA. It could now potentially close below it again after failing to make a new high during the December rally,” Krinsky wrote, referring to the 50-day moving average. “That’s a subtle, but notable change in character.” The S & P 500 has yet to top its intraday all-time high of 6,920 set Oct. 29 — despite setting record closing highs in December. On top of that, recent weakness has put the index down 0.7% during a historically strong month. The S & P 500 averages a 1.4% gain in December, according to data from the Stock Trader’s Almanac. December also features the start of the so-called Santa Claus rally, which runs across the last five trading days of the month and the first two of January. During this period, the S & P 500 sees an average gain of 1.2%, per the Almanac. But with the S & P 500 struggling to stay above its 50-day moving average and the recent weakness seen in the benchmark, there’s a possibility Santa Claus may skip Wall Street this year. “We think it probably holds the 50 DMA for now. Another test in the coming days, however, would likely result in a bigger breakdown,” Krinsky wrote. The lack of a Santa rally wouldn’t bode well for the stock market in the new year either. “Santa’s failure to show tends to precede bear markets, or times stock could be purchased later in the year at much lower prices,” the Almanac said.
