EarningsBeats.com Digest for December 15, 2021
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Fed Meeting Ends Today; What Happens Now
The good news is that the first half of December ends today. Over the past 70 years, the historical return of the S&P 500 is as follows during December:
December 1-15: +1.80%
December 16-31: +35.79%
December is typically a bullish month, but the numbers above tell us a lot. It's the second half of December that historically is the strongest. We've seen the S&P 500 remain near its all-time high, but growth stocks have been beaten up, while value
stocks have led. That could change later today after the Fed policy statement at 2pm ET, but we'll have to wait and see. If the stock market remains on the defensive, then health care stocks (XLV) could benefit. Check out the chart:
The XLV has been here before, but the Fed announcement could propel it to a fresh all-time high. And that bottom panel of the chart shows the XLV breaking out on a relative basis to a new recent high. We're seeing one sector after another reach new highs and it may very well be health care's turn on an absolute basis. A rising tide lifts all boats and a rising secular bull market lifts all sectors. The XLV will break out, in my opinion.
It's just a matter of whether growth regains center stage after today's announcement, or if we see the value names benefit. If it's the latter, the odds of an XLV breakout grow.
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Tom Bowley
Chief Market Strategist
EarningsBeats.com
Better Timing. Better Trades.
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