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The Santa Claus rally refers to the historical trend for the S&P 500 index to rally the last 5 trading days of December and the first two days of January. The Santa Claus rally has failed to materialize 15 years since 1950, including this year. Two of those, in 2000 and 2008, preceded significant market drops. The next two indicators for the market are the first five days of January and the performance for the month of January. When all three indicators are negative, the market has been flat or down every year except 1982. So we aren't off to a great start. Looking back at 2015, the Santa Claus rally was negative, the first five days were weakly positive and the full month of January was negative. And we ended the year with the S&P 500 index down -0.7% or up 2%, if you count dividends in the return.

Trading volume dropped back from yesterday's highs with 2.4 billion shares of the S&P 500 stocks trading today, right at the 50 dma. Trading volume declined 12% on the NYSE and declined 8% on NASDAQ.

SPX strengthened a bit today and closed up $4 at $2017. RUT gained $2 to close at $1110. Volatility contracted with the VIX declining 1.4 points to 19.3%.

No new economic data was reported today, but the ISM services index, ADP's private employment payroll report, and factory orders are all expected tomorrow.

As we face the new year, I'm not seeing much positive news. Will we continue to see a range-bound market or is it going to get worse yet?