Morning Notes — Narrative

The driver behind this week’s rally is a growing belief the Omicron wave will be widespread but relatively brief with infection rates fading in early January, if not sooner. The S&P 500 (SPX) is trading at an all-time record high at the moment.  The close matters most, but equities are biased higher into year-end as the catalyst vacuum should keep present trends in place.  A record high close would have us looking at a near-term target of ~4870-4890 or a gain of ~3% from current levels.  Cyclical/value sector leadership over the past 3 sessions and an impressive reversal in the Russell 2000 (RTY) from oversold levels give us confidence in the potential for more upside.  Light attendance and thin liquidity this time of year is the consideration that’s priced into our more modest target.