On the last trading day of the year, we are looking towards a positive bias and open, although Dow 20,000 will probably have to wait.  Today will be another light volume day, as we have seen all week.  There is a bit of economic data in the form of Chicago PMI.  Expectations are for a December read of 56.8, lower than November’s 57.6, however it is in well into expansion mode.

Oil is trending down this morning to $53.55 and will be in focus with the OPEC output deal formally coming on line on January 1st. There is the potential for surprise with compliance with the deal, which would likely elicit a strong reaction from traders.  Be that as it may, oil is nearing its largest annual percentage gain since 2009. Energy was the best performing sector on the S&P.

If manipulation is a tough concept to understand, just check out the action in NVDA. First the stock was added to Goldman's conviction buy list on December 27, and it soared 6.9% on the day. The next day the stock was up pre-market until the powerful short seller Citron (remember Valeant Pharmaceuticals) made cautious comments about "headwinds" after the open. The stock turned around and sold off and gave it all back and then some. Unbelievably, yesterday about 2 pm the stock turned around racing up to close 2% higher. The day’s range was $102.80-111.49, with massive volume of 54,092,238 shares. This morning its look higher again. When you think about all the ground that was covered in just 3 days, and the incredible volume that accompanied these moves, it is easy to see this action is not based on some fundamental change for the company. 

The chess game between the U.S. and Russia continues after the Obama administration imposed sanctions on Russia.   Last night in a statement, President Elect Trump said its time to move on, but he will meet with intelligence leaders next week.  Russia first said that it would expel 35 U.S. diplomat in retaliation, but Putin has since decided to wait to see what happens after inauguration day.

It has been a great year overall.  The Dow is up close to 14%, of which 8% has been since the election.  We had had some incredible profits and 2017 is poised to be a banner year.  As we end this trading year and prepare for the next, we would like to reiterates last week’s comments.

“Right now, the market is chasing its own tail; while that might frustrate some, it shouldn’t. I do want to caution folks who have been out of the market for a long time; if they are looking to come back in and not to face any hiccups, it’s the wrong mentality. I have a fair amount of positions that are lower, but I feel great about them for fundamental reasons. 

However, understand that stocks that get hit are going to go down more than stocks that are winners because we are near all-time highs.

These overreactions create opportunity, but it can whipsaw investors that are just warming up to the market to take quick lumps and to move back to the sidelines. I hope everyone avoids that emotional reaction, and instead, look to buy dips and ride this market for the next several years.

Hang tough, and don’t fret about 20,000 or greater volatility and market resistance as its par for the course. “

There will be no Afternoon Note. 

We wish you a Very Happy, Healthy and Prosperous New Year.  Have a safe holiday weekend.