Looking Forward and Volatility
As we start the last week of the year, we are looking if we might be potentially looking at a “Santa Claus Rally”. The last week of the year, no guarantees historically tends to be a strong week. One reason for this is that in previous years we have typically seen lower volume as a lot of traders on Wall Street take this week off. We are hoping that last weeks’ momentum carries into this week. Over the next few weeks, we will go over our thoughts on the market for 2022. One theme that we believe could continue is volatility. For the month of December in 2021, we have seen more volatility than the previous 20-year average. We are keeping an eye on certain economic conditions such as Covid and the Federal Reserve.
State and local operating budgets are looking very strong. They are operating at a surplus for the second consecutive year. Keep in mind that last year was the first time they had a surplus since 1978, on average. Why the surplus? Nominal GDP has been strong, we have had a lot of stimulus from Covid, capital gains are being pulled forward this year as investors had been worried about tax rate hikes next year and spending, as a percentage of GDP, is the lowest it’s been since 1985 for state and local governments.
We have discussed volatility as we saw a down market two weeks ago followed by a strong last week. The S&P closed on Friday at 4,725 giving us a new resistance level of 4,755 with a support level of 4,695. The 100-day S&P moving average currently sitting at 4,531. This has moved up due to the markets being up last week. It’s important to distinguish that volatility isn’t only relevant to down markets but rather the sharp fluctuation in the overall markets. We will continue to keep a close eye on the indicators that we look at and hope that the current momentum can lead into the new year and beyond.
Fi Plan Partners is an independent investment firm in Birmingham, AL, serving clients across the nation through financial planning, wealth management and business consulting. Fi Plan Partners creates strategies in the best interest of their clients using both fee based investing and transactional investing.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth in this presentation may not develop as predicted.
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