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The views expressed in this report are those of Lesley Beath and may differ from Morningstar's views.

Reviewed this week

A selection from the Healthcare sector, plus a couple from the Small Ordinaries.

• Overview
  US and Australian equity market remain below critical resistance. More...
• CSL (CSL)
  Healthy. More...
• Cochlear (COH)
  Improving. More...
• Sonic Healthcare (SHL)
  A near-term pause. More...
• ARB Corp (ARP)
  An outperformer. More...
• Kathmandu Holdings (KHD)
  Climbing higher. More...
• Newcrest (NCM)
  Not much joy. More...

Please note: before making an investment decision, Morningstar recommends you read the fundamental research available on these stocks.

Disclaimer: To the extent that any content in this report constitutes advice, it is general advice that has been prepared by Lesley Beath without taking into account the particular investment objectives, financial situation and particular needs of any individual investors. If necessary, you should consult with a licensed investment adviser or dealer in securities such as a stockbroker before making an investment decision. Opinions expressed herein are subject to change without notice and may differ or be contrary to the opinions or recommendations of Morningstar as a result of using different assumptions and criteria.

Overview

As we move toward the end of the year, market participants and commentators often wonder whether we will see a 'Santa Claus' rally this year. However there seems to be some misconception about the original meaning of the phrase. So let's get a bit pedantic and clarify the issue.

Many consider that any rally toward year is the so-called Santa rally, but this is not the case. The Santa Claus rally, according to Jeffery Hirsch, editor-in-chief of the Stock Trader's Almanac, and son of its founder Yale Hirsch, is the last five days of the year plus the first two days of the next. And that's it. It is not the seasonal rally that often unfolds in November, December, and January, traditionally the three strongest months of the year.

As way of background, Yale Hirsch created the Stock Trader's Almanac, which was first published in 1967. It was the first compilation of the market's seasonal trends and tendencies and it highlighted a number of statistically predictable market phenomena that have since become well known. Some of the more famous are the January Barometer and the Santa Claus Rally.

According to Hirsch, if the Santa Claus rally doesn't eventuate, the outlook for the coming year deteriorates significantly. Hence the saying 'If Santa Claus should fail to call bears may come to Broad and Wall.' He cites 1999 and 2000, as well as 2007-2008 as good examples of the adage.

If we look back over 2011, the seasonals have worked relatively well. The market peaked in May (Sell in May), had a poor September (historically the worst month of the calendar year), and then made a significant low in October (October is known as the Bear killer). So it will be interesting to see what happens post Christmas.

But let's not get ahead of ourselves. Back to the present.

Both the US and the Australian equity market remain below critical resistance, which has been discussed in recent reports. There were no breakthroughs last week, so the uncertainty remains.

On the domestic front, stocks that were attempting to break topside, have failed to do so. We continue to wait for some clarification.

(click image to enlarge)

China has just broken to new 2011 lows. Unless there is a quick rebound this will, in all likelihood, add further pressure to the resource side of our market.