by Jason Bodner
December 31, 2024
It’s December 27th as I write. A lot of cool things happened on this day in history. Radio City Music Hall opened in 1932, and the IMF was founded in 1945, but I think one of the coolest things to happen today in history was that in 2004 radiation from a magnetar explosion reached Earth. A magnetar is a neutron star with a powerful magnetic field. One magnetar, called SGR 1806-20, suffered a star quake 42,000 years ago and so it took 42,000 light years to reach us. It was the brightest stellar event ever recorded, releasing more energy in 1/10th of a second than our sun did in 100,000 years. On this date 20 years ago, its flash bounced off the moon and lit up the earth’s upper atmosphere in a magnificent light show.
But on Friday December 27th this year, not much exciting happened other than the stock market having a hard day. The NASDAQ fell as much as -2.3% before closing down 1.5%, as did the Russell 2000. The S&P 500 fell as much as -1.73% before closing down 1.1%. The thing is, I don’t really follow these daily swings much, and I don’t think many people are too focused on the overall market today, either. We’re all doing personal things and spending time with family. Or we are at work. Wall Street is on a break, too.
In fact, every year I worked on Wall Street, this time of year was composed of a skeleton crew of juniors and the odd senior who drew the short straw. Call it the “B” team, or the “replacement squad,” and a volatile day like last Friday, or today, illustrates that old trope: “When the cat’s away, the mice will play.”
It’s well known that the final weeks of the year for stocks are usually noisy, volatile, and, most importantly, over-reacting to low trading volume. Let me provide some hard data to illustrate this.
First let’s look at the unusual buys and sells for stocks and ETFs. As you can see below, we entered into a vacuum of any such buy or sell signals. Predictably, everything dried up, both big buying and selling.
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