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Weekly Memorandum 12/28/2020

Stocks are up nicely across the board this morning after the Christmas holiday, but we note that the Dow hasn't made a new high in a couple weeks. This can be cause for concern in the short-term, and would obviously be alleviated if it made a new high. We have another shortened trading week, with markets being closed on Friday for New Years.

The big mover over the weekend, however, was Bitcoin, which exploded once again to new all-time highs. Ethereum and Litecoin followed to new multi-year highs, but continue to lag in terms of ATHs. A new Mercator Crypto report will be published this Thursday, and will include our updated outlook for the crypto sector. Our long positions continue to work nicely.

The dollar caught a relief rally last week, but not enough to suggest its current downtrend is poised to reverse. T-Notes were down (rates were up) and most other commodities were flat. Precious metals were marginally higher.

We now are in the period that's known as the "Santa Claus rally." This includes the last 5 trading days of the year, plus the first 2 of the following year. When this period produces a positive return, it usually is a positive omen for the forthcoming year. Obviously, it doesn't work every time, but enough to warrant our attention. Our work still suggests that we could see a meaningful high in equities followed by a correction within the next couple weeks.

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