Whither the Santa Claus Rally?

It was a flattish week for U.S. stock markets, with the Dow Jones down 0.79%, the S&P 500 falling 0.34% and the NASDAQ dropping 0.21%. In contrast, the MCSI Emerging Markets Index jumped 3.49%.

Big gainers in your Bull Market Alert portfolio included the Ultra Nasdaq Biotechnology ProShares (BIB), which jumped 6.55%.

You were stopped out of Direxion Daily Small Cap Bull 3X Shares (TNA) before buying it back.

Signature Bank (SBNY) fell below its 50-day moving average and moved to a HOLD.

Despite Santa’s upcoming visit on Friday, it’s not looking a lot like Christmas in the stock market.

With the U.S. stock market slipping on Friday below levels it saw back in November , December is falling short of its reputation as the best-performing month of the investment year.

Nor does it look like that much of a Santa Claus rally is in the cards.

Most ominously, stock market volatility is back.

Last week, the S&P 500 rose or fell by 1% or more on four occasions — two down and two up — as markets were jostled by the Federal Reserve interest rate increase and the relentless fall in the price of oil.

The U.S. stock market hasn’t seen this kind of volatility since 2011. So far this year, the Dow has moved 1% or more on 70 days, nearly twice as much as in all of last year.

With this level of uncertainty, I am holding off on making a new Bull Market Alert recommendation this week. In light of the holidays, there will be no Bull Market Alert next week, but I plan to be back with a new recommendation in the New Year on Jan. 4.

Until then, I wish you a Merry Christmas and Happy Holidays. But before I sign off, you will find my year-end view below of the current Bull Market Alert recommendations.

Portfolio Update   

Alaska Air (ALK) fell 3.41% last week as markets took a wild ride higher, then lower. Alaska Air announced Wednesday that it was signing on to an effort to power all of its flights out of Seattle-Tacoma International Airport with aviation biofuel. Although opening efforts will focus on feasibility studies, the future of this endeavor could lead to cheaper and more environmentally friendly fuels. ALK is a BUY.

Ultra Nasdaq Biotechnology ProShares (BIB) jumped 6.55%. BIB fared well last week and bucked the broader market’s slide. An unusually high volume of January 2016 call options were purchased last week, suggesting quite a bullish outlook on the exchange-traded fund (ETF). Based on BIB’s jump-start last week, further gains could be on the horizon. BIB is a BUY.

Manhattan Associates, Inc. (MANH) closed the week flat, dipping just 0.18%. Despite opening last week on a bullish move higher and crossing above the 50-day moving average (MA), MANH could not hold the line and fell back below the 50-day MA through Thursday and Friday. MANH remains a HOLD.

Signature Bank (SBNY) closed down 0.16%. The recent Fed rate hike should be good for most bank stocks moving forward. And, if rates continue to rise through 2016, SBNY should rise along with them. Although SBNY’s dip last week was slight, it was enough to push the stock down below its 50-day MA and move it to a HOLD.

Direxion Daily Small Cap Bull 3X Shares (TNA) dipped 0.86% since you re-entered this small-cap play after being stopped out of it on Monday. Also, the iShares Russell 2000 (IWM), the largest small-cap ETF (by assets), has been experiencing high inflow over recent weeks. This is a bullish sign for TNA and our associated IWM option calls. TNA is a BUY.

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