Thin Holiday Trading Offers Buying Opportunities
Here's what I'm focusing on as we head toward year-end.
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The half-day session on Christmas Eve was typical holiday trading. The mood was upbeat, volume was light, and breadth was good. There were 7,000 gainers to around ,2400 decliners.
The Magnificent Seven powered higher again with a gain of 2.3%, but small-caps IWM finally showed some life and were boosted by about 0.9%. The Nasdaq 100's QQQ gain was its best Christmas Eve showing since 2000.
It was enjoyable action but doesn’t signal anything meaningful. It appears traders are trying to make a Santa Claus rally work, which bodes well for a continuation next week.
I continue to focus on small-caps that have been in ugly downtrends recently and may see a final tax-selling washout in the next week. After the Christmas holiday, there won’t be any significant news flow, but there will be plenty of positioning action. Also, there is usually at least one day on which winners are sold at the very end of the year.
A lot of year-end action has little to do with fundamentals or technical patterns, which may seem random, but it can offer opportunities, especially when trading is very thin.
Merry Christmas and Happy Holidays. I will see you on Thursday.
At the time of publication, Rev Shark had no positions in any securities mentioned.
