Tricky Trading Abounds as 2024 Comes to an End
There are a host of reasons why the end of the year can be difficult to navigate.
You've reached your free article limit
You've read 0 of 1 free Pro articles.
The last two trading days of 2024 will be particularly difficult to navigate. Big funds have a number of different agendas at work, some of which are conflicting.
Typically, people are hesitant to sell big winners and trigger taxable gains. They also desire to show that a portfolio holds the best-performing stocks. On the other hand, not everyone is concerned about triggering gains, and they often like to raise cash and start the new year with a clean slate.
At the other end of the scale, there is often a desire to sell the year’s biggest losers and to offset taxable gains. This precipitates what is known as the January Effect, when the worst stocks bounce back from the selling pressure. Not all of these stocks are fundamentally poor but are sold for portfolio management reasons.
A third dynamic is the inclination of speculative traders to be more aggressive during thinner holiday sessions. Early Monday morning, there is action in themes such as drones, AI robotics, and natural gas.
The Magnificent Seven MAGS stocks are under pressure after a poor day on Friday, and Bitcoin IBIT is also struggling. These have been the biggest winners of the year, and there is likely some inclination to lock in the gains and try to catch new entry points after some corrective action and consolidation.
I’ll be looking for short-term speculative trades and for entry into stocks that have been beaten down by tax selling.
It is important to recognize that the trading action during the last two days of the year can be very random and volatile. It won’t tell us much about where the market is heading when we kick off the new year, but it is a good time to work on a shopping list.
At the time of publication, Rev Shark was long IBIT.
