S&P 500 eyes 7000 in thin holiday trading as year-end window dressing looms

• Stocks are churning, the path of least resistance is UP.
• S&P 7000?
• Bonds stable, Oil tests resistance and gold traders are taking profits.
• Try the New Years Day – Potatoes and Eggs.

Ok – so stocks ended the week on a whimper but even with that, we should note that the S&P posted its best week all month. The much stronger than expected GDP report responsible for the excitement earlier in the week. After the bell rang, we saw that the Dow down 20 pts, the S&P lost 2 pts, the Nasdaq lost 20 pts, the Russell down 13 pts, the Transports down 22 pts, the Equal Weight S&P ended flat while the Mag 7 gave up 119 pts.

Let’s be honest – it was an uneventful session, the day after Christmas – not much going on at all…volumes were anemic – were you really expecting something different? And this week won’t be much better – we might get a ‘push’ on Wednesday – the final trading day of the year, but beyond that – I do not expect to see much at all.

Now there could be one exciting thing that happens — a push to kiss and maybe pierce 7000.

Recall: 6920 was the prior all-time high, and we discussed that once the S&P pierced that level and closed above it, it would set the stage for the algos to take it higher. That’s exactly what happened on Christmas Eve, when the S&P broke out and closed at 6932. Friday saw some churn — trading as high as 6945 before closing at 6929 — still above that key breakout level.

So here we are, with three trading days to go. At this point, the surprise would be if they don’t take a shot at 7000.

Why? Because the breakout has already occurred, we’re in a holiday week with thin volumes and limited participation, there’s nothing to force selling, and we can expect some last-minute window dressing by institutional managers — all of which creates a bias to the upside.

And let’s be honest — who doesn’t want to see S&P 7000 before the ball drops? Think of what that means for your portfolio!

Bonds did very little – the TLT ended the day flat while the TLH lost 0.3%. Yields remain fairly stable. The 10-yr ended the week yielding 4.11% while the 30 yr is yielding 4.79%. 30 yr mortgages ticked down just a hair at 6.18% for a FICO score of 720+.

Now onto oil -

Last week, oil traded up to trendline resistance at $58.60, only to fail — ending the week at $56.74. This morning, crude is up $1.20, or 2.1%, at $57.94, on a headline claiming that China’s crude imports rose to a record monthly volume.

Hmm. Now that’s interesting. When did China suddenly “wake up”?

The prevailing narrative has been that China demand is falling, the economy is weak, blah, blah, blah — and that this weakness is a key driver behind lower oil prices. (just FYI – I don’t believe very much that comes out of China). That’s a view I’ve challenged all along. Demand — globally, not just in China — has remained strong. The real issue hasn’t been demand. It’s always been supply.

A massive oversupply (think OPEC+ and US production increases) — and expectations for a continued glut into early 2026 — is what’s weighed on prices. As that excess supply works its way through the system, prices should stabilize and drift modestly higher. Nothing dramatic — just higher than where we are now.

And on the demand side, in addition to just ‘normal demand’ there are underappreciated supports. Reconstruction in Ukraine, Russia, and Gaza will require enormous amounts of energy (think oil). And AI? It doesn’t create an oil boom in and of itself – but it raises baseline energy consumption and there are huge second order effects. Think diesel demand for generators, think construction demand for the data centers, think energy grid buildout logistics and think of backup support demand. In the end it lengthens the tail on fossil fuel usage and makes the popular “oil demand destruction” narrative far less realistic. At a minimum, it puts a firmer floor under oil demand.

In the end – don’t go selling your energy stocks!

At the moment, the trendline holds and we remain in the $55/$58.60 range. Should we try to pierce it again – it would not surprise me if we saw oil test $60.10.

And gold continued its push higher, trading up to an intraday high near $4,550 on Friday — and again briefly this morning — before profit takers stepped in, sending prices lower.

As of 6:45 a.m., gold is down $85, trading around $4,450.

It would not be a surprise to see gold work back toward the mid-October highs near $4,380. That would say nothing about the longer-term direction, and everything about short-term profit taking — which makes sense after gold’s explosive rally (+16%) off the October low of $3,885. Which says nothing about the 72% rally this year. In any event – today’s action is more about ringing the cash register than a statement about the next move.

This morning futures are churning…..Dow futures are +6, S&P -13, Nasdaq -90, while the Russell is +-1.

Remember – this is another holiday shortened week, players will be away, volumes will decline and moves will become MORE amplified – in either direction. This is not the time to veer off the plan…. Capisce?

European markets are churning a bit higher – up between 0.1% & 0.2%.

The S&P closed at 6,929 – down 2 pts on the day. This morning – we are seeing a bit of additional weakness in the S&P – which I think is a ‘head fake’. We are now just 71 pts or 1% away from kissing 7000. My bet is that it happens on Wednesday.

Potato and eggs

This is a great New Year’s Day breakfast.

For this you need: Eggs, potatoes, garlic, onion, s&p, butter, olive oil, fresh grated Parmegiana Cheese and if you prefer a pinch of Italian seasoning.

Preheat the broiler (oven) to high.

Peel a couple of russet potatoes and then slice - now toss into a pot of boiling water - bring the pot back to a boil and blanch for 3 - 5 mins.... Remove - strain and set aside.

In a large bowl - crack 6 to 8 eggs - Beat well - add a splash of whole milk (or 1/2 & 1/2), season with s&p (and if you like a pinch of the Italian seasoning). Add a handful of grated cheese. Mix well - set aside.

In a large oven safe frying pan - melt a dab of butter, add a squirt of olive oil and heat. Now add chopped garlic and sauté. Next add some sliced onions and sauté - until soft and golden.... add back the potatoes and brown on both sides – sautéing for maybe 10 mins or so.

Next - pour the egg mixture into the pan and allow it to set. Twirl the pan to allow the egg to spread and cook. Once the edges begin to pull away - place the pan into the oven under the broiler.... Watch as it quickly cooks the top of the “frittata”. Remove and slide onto a large serving platter - cut like pizza.

Have toasted slices of Italian bread on the table for your guests to make a sandwich. Serve with Ice Cold whole milk.