Fears of the Russian financial crisis sent the ruble tumbling on the foreign exchanges. At one point on Tuesday, the ruble dropped more than 20% as crude oil prices continued to slide. Russia’s central bank raised interest rates from 11.5% to 17% to halt the ruble’s free fall on the foreign exchanges.

The S&P surged 2.04% as the U.S. Federal Reserve concluded their Open Market Committee meeting on Wednesday with nothing changed, except they introduced a new monetary statement term, "patient", into the mix. The term "considerable time" is still in there but no longer considered as the Fed monetary statement.

The bottom line is that the Fed's rate hike will not take off until April of next year at the earliest. Some have said that the Fed hawks will be retiring next year, meaning the Fed might be run by a whole bunch of doves. Thus, Ms. Janet Yellen, the Fed Chair, might not even raise the rate until 2016.

The global equity markets, including the S&P 500, got a big support from the announcement by the Chinese Foreign Ministry that China had not sought to amend its currency swap agreement with Russia, despite the recent plunge in the ruble's value against the dollar. In October, the Bank of Russia and the People's Bank of China (PBOC) reached a three-year agreement on currency swaps worth 150 billion yuan or about U.S. $2.4 billion. 

Speculation was floating around that China may be preparing to bail out Russia. As of September, foreign exchange reserves reported by the People’s Bank of China stands at about U.S. $3.88 trillion. If China decides to bail out Russia, the United States and the European Union may have no say at all as the United States and the European Union both depend on trade with China. 

The CBOE Crude Oil Volatility Index (OVX), which spiked to a 52-week high of 58.43 on Tuesday, dropped to 54.84 on Friday. The oil bears decided that it was time to get out of their short positions and to take profits. Just a reminder, high OVX readings mean traders see significant risks that crude oil prices will move sharply lower. 

Traders can either buy or sell OVX options, crude oil volatility second derivatives, or just buy OVX options as a hedge against a market downside if they have long positions on crude oil. Crude oil futures for delivery in February 15 [CLG15.NYM], which is traded on the New York Mercantile Exchange, surged U.S. $3.41 per barrel on Friday, to U.S. $57.77 per barrel, or 6.27%.

The S&P 500 seemed to find a bottom at 1972.55 on Tuesday. Many traders are not convinced that it was the bottom as the trading volume was light. A bullish crossover may be ready to occur as the MACD is now turning up and ready to cross above the signal line. Although the S&P 500 chart pattern shows a bearish ascending wedge, a breakout will take the S&P 500 to a new all time high at 2100. 

My guess is that a Santa Claus rally might have started early this year as short coverages are taking place across market sectors including equities, commodities, currencies and bonds. As the old saying goes, “Don’t fight the Fed”, and in this case the “PBOC” too, I might add. Just a reminder, a Santa Claus rally is a surge in the equity markets over the final week of trading, prior to New Year’s.

S&P 500 TICKER: SPX 12.03% YTD

Outperforming Sectors: Healthcare 29.03% YTD, Utilities 24.87% YTD, Information technology 22.91% YTD, Financials 14.90% YTD, Consumer staples 14.79% YTD.

Underperforming Sectors: Industrials 10.48% YTD, Consumer discretionary 8.46% YTD, Materials 8.27% YTD, Telecommunication services (-0.13%) YTD and Energy (-6.34%) YTD.