Will Santa Claus still come?

In the past 10 years or so, the Santa Claus is the most reliable guy to come almost always around this special period of the year, from the Christmas eve throughout a few days post New Year's day to end. The trading volume is usually very light as most of the Street traders are gone for the year but still, the Santa Claus wants to send a rally to end the year and celebrate the new year! Even last year was no exception when the market had relentless declined day after day (the exact opposite of what is happening now) to culminate to the abysmal point of the deep 20% decline right on the Christmas eve, Dec 24. The sentiment was so depressed that the world seemed to be ending in front of us. In that week, 47% of AAII respondents were bearish, and only 25% of them were bullish.  And of course nearly no one thought Santa Claus would come. That was the moment that I wrote: "The world will not end" on the Christmas eve last year. Very lonely I predicted the Santa Claus might still come by saying "...don't be surprised for a "rip your face off" kind of rally in the final days of the year". Sure enough, the Santa Claus did not disappoint us and did show up with a strong rally for a 8.5% rebound to finish the year (about 200 points jump for S&P)! 

Well, we are getting into this SC rally time again next week. But the situation has totally changed. Not only the S&P has easily beaten my 20% increase target for 2019 that I made last day of 2018, it is relentless making new highs day after day in the past few weeks. Now it seems the sky is too low for the market and the world is full of roses everywhere. The investors' sentiment is a mirror image of what we saw last December, with more than 44% of investors being bullish and only 20.5% of investors being bearish per the latest AAII survey! If you randomly ask anyone, probably over 90% will tell you the Santa Claus will continue to come with a rally to end the year. How can he not be!! 

I'd also agree for such an almost sacred annual event that the Santa Claus must come religiously. But then I hear another voice warning me the unbelievably low Put/Call ratio around 0.6 now. You see, P/C is consider low already at 0.8 that often triggers a short term market decline. So it is kind of conundrum moment right now with two conflicting indicators flashing loudly. It seems to me that something must give. If we still want to see a strong Santa Claus rally, then the chance is high to see a quick swift market mini crash probably right away. Maybe we will see that moment Monday/Tuesday and followed by a rally? That seems the most logic telling as far as I can see.  

Expect a quick volatility shooting up in the next few sessions!