Markets say ho ho ho: Stocks advance, Gold makes new high, S&P teases record levels

***This is the time of year when I get to say thank you to all of you who join me throughout the year. It’s truly a pleasure to engage with you each morning, and I sincerely appreciate your loyalty to Morning Thoughts.

May this holiday season — and the year ahead — bring you peace, joy, good health, and prosperity.

I’ll be taking the next couple of days off and will be back on Monday, December 29.

Merry Christmas to you and your families.

Take good care,
KP***

Jingle bells, jingle bells, jingle all the way… Oh what fun it is to ride… a stock portfolio that just keeps climbing higher.

And for those asking whether the Santa Claus Rally is coming —

WAKE UP. He is already on the roof!

Stocks continue to rise into year-end, momentum is building, and the tape is telling the story. Individual names making new highs, the indexes inching ever closer to new highs, all while Gold made a new closing high at $4,443. The VIX – fear index – falling to levels not seen since December 2024 and forecasts for 2026 remain robust…..

As Francis Church – Editor of the New York Sun Newspaper told us in 1897: “Yes, Virginia — there is a Santa Claus.”

At the closing bell – the Dow registered a gain of 227 pts or 0.5%, the S&P up 44 pts or 0.6%, the Nasdaq I sup 121 pts or 0.5%, the Russell up 30 pts or 1.2%, the Transports up 121 pts or 0.7%, the Equal Weight S&P up 60 pts or 0.8%, while the Mag 7 gained 182 pts or 0.5%.

It was a broad advance – led by Financials up 0.9%, Industrials up 0.8% and Basic Materials up 0.7% and then Consumer Discretionary up 0.4%, Tech up 0.4%, Healthcare up 0.2%, Energy up 0.2% and Communications up 0.1%. We saw weakness in Utilities – 0.4%, Consumer Staples – 1.1% and Real Estate down 0.4%.

Other sector performance....Airlines up 1.6%, Metals & Miners up 1.9%, Aerospace & Defense up 2.5%, Big Pharma up 0.8%, Disruptive Tech up 1.5%, Semi’s +1.4%, Emerging Markets up 0.5%, Retail down 0.4%, Homebuilders – 0.5%, the Value trade down 0.02% while the Growth traded added 0.6%.

The data point today is all about the GDP report for the 3^rd qtr.…..and while the estimate is for it to be +3.3% - the whisper number is 3.6% - something I think might be a bit aggressive – but nothing ceases to amaze me. We have now erased all of the early December losses – almost 80% of the S&P (that’s 400 names) ended the day higher yesterday – helping to push that index to just within 30 pts of kissing its all-time high…..and this morning – futures are flat to slightly higher yet again.

Look - Professional fund managers have been busy ‘window dressing’ for the year end marking period and are close to fully invested – meaning they have low levels of cash. Why you ask? Think ‘Performance Anxiety’! If stocks keep rising and they are sitting in cash, they lag their benchmark and risk unhappy clients. And no one wants an unhappy client.

Now, retail investors are a different story.

Cash levels are still elevated. Households are sitting on large balances in money-market funds and bank deposits. Why?

Because they were earning attractive “risk-free” yields (think 5%) — and now many are afraid of buying stocks at market highs. They don’t want to be reckless.

But here’s the question: what actually defines reckless? Because context is everything. Markets spend a lot of time making new highs — just look at the charts. That’s literally how long-term wealth is created. If buying at highs were reckless, long-term investors would never make money — and we know that’s simply not true.

Buying stocks at highs makes sense when- earnings are growing (they are), liquidity is supportive (think accommodating FED), the trend is intact (it is), and you have a plan — time horizon, diversification, risk controls (if you don’t – you need to call me).

Buying at highs makes no sense when - you’re chasing momentum with no plan, you’re all-in on one trade or one theme (hmmm, now that’s an interesting thought…), you’re using leverage (think margin or leveraged ETF’s or loans against your Bitcoins…..), or you’re investing money you’ll need in the short term. That’s when it stops being invested and becomes gambling.

The bigger risk historically isn’t buying at highs; it’s waiting for the perfect pullback that never comes. Many investors miss entire bull markets because they want to long. In the end – buying stocks at the highs isn’t reckless, buying stocks without a plan is.

Ok – onto bonds…and they fell – the TLT down 0.2% while the TLH lost 0.1% and that pushed yields higher. The 10-year Treasury ended the day yielding 4.16% while the 30-year is yielding 4.84%. This morning though, bonds are a bit higher and that is sending yields down by 2 bps…. again – nothing to write home about – more churn.

Oil is now trading at $58.10 – just below trendline resistance at $58.60. If we pierce the trendline – then a push to $60 is likely, but my gut says that for now – the trendline holds and we remain in the $55/$58.60 range.

As noted – Gold made another record closing high and that is already being challenged this morning….Gold closed at $4,443 last night and this morning it is up $42 at $4,483……We have now broken out of the October high at $4,450 which puts us into uncharted territory. A trendline drawn from the April high ($3,611) through the October high ($4,450) suggests the potential for gold to trade toward $4,700-ish over the coming months. Meanwhile, trendline support sits near $4,180.

This morning futures are flat…..Dow futures are unchanged, S&P +1, Nasdaq +4, while the Russell is -1.

Remember – this week and next are holiday shortened weeks, players will be away, volumes will decline and moves will become MORE amplified – in either direction. Stick to the plan – Capisce?

European markets are churning a bit lower…. But again, it is just end of year action…. nothing will move the markets.

The S&P closed at 6,878 up 44 pts on the day. We are now just 32 pts away from the 2025 high…..if the GDP comes in closer to the whisper number – we just might see us test that level today….if it comes in a bit weaker, we just might churn a bit longer.

Candied almonds – Another holiday favorite and a Christmas tradition

For this you need two things. Almonds and white sugar.

Spread out a sheet of aluminum foil on the counter.

Put 1 c of sugar in a deep pot. Turn the heat to HI – add the almonds – Like a 25 oz bag….

Now with a wooden spoon just stir….as the sugar heats up it will melt – but you need to keep stirring until it becomes dark and nutty brown. Stir to coat all of the almonds….

Now – quickly move the pot off the heat and spread the almonds out over the foil. Let them cool. Now if you live in the up north – you can put them outside in the cold air to harden, if you live in a warm climate – use the freezer (15 mins) to cool them off –

Once they harden – then just break them apart and put in a candy bowl and have them on your coffee table for guests to enjoy…. Trust me – they won’t be there for long.