With the US Dollar rolling over and some bullish numbers coming out of the US there is a good chance that we will see a so-called ‘Santa Clause’ rally, with US stocks dragging the other major indices higher.
The chart below shows the US Dollar’s recent decline. It also shows that price momentum is curling back down (circled). Couple this with some positive numbers coming out of the US, such as a pick up in manufacturing growth and a slight improvement in the unemployment rate and we could see stocks rally in the run up to Christmas.
Chart courtesy of Stockcharts.com