Santa has done his job and is leaving the town....

The market is really a weird animal with its own mind that is difficult to understand by us, mortal (凡人)! Sometimes good news is bad news for him and other times bad news is good news. For today, it is the mixed news that has become great news for him. So we have seen a hugely positive market throughout the day. Here is the news: **************************************

This morning, we received three pieces of economic data We learned the latest numbers on the non-farm employment change, the average hourly earnings, and the ISM Service PMI. Non-farm payrolls came in hotter than expected, climbing 223,000 compared to expectations of just 200,000. Not great news. But on the average hourly earnings front, the data were encouraging. Here’s CNBC: Wage growth was less than expected in an indication that inflation pressures could be weakening. Average hourly earnings rose 0.3% for the month and increased 4.6% from a year ago. The respective estimates were for growth of 0.4% and 5%. This is good news, as the Fed has been very nervous about wage increases. Finally, the ISM Service PMI showed a contraction for the first time in more than two-and-a-half years thanks to weakening demand. The report also showed that prices paid by businesses slowed substantially, another piece of data suggesting inflation is cooling. This PMI report isn’t great news for the economy, but that means it’s wonderful news to Wall Street who wants to see weakness. ***************************************

For the past few days I have been struggling to try to determine whether or not Santa has left the town or he is still trying to reach the unfinished target: 3900 for SPX. Looks like Santa has finally got it done today. SPX has indeed touched the 3900 level during the day. By doing so, the market has used up a lot of energy. We may still see a few points up from here early next week but I think the next major move will be down, a lot down from here! I shared two trades to bet on the upcoming downdraft, which will likely start next week.