We Have an Interesting Setup in Front of a Historically Strong Day
Here's what investors and traders need to know about the current environment and market seasonality.
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News that President-elect Trump would impose tariffs on China, Mexico, and Canada on his first day in office shook the market up a little on Tuesday, but news of an Israel-Hezbollah cease fire pushed the S&P 500 and DJIA to new closing highs.
There was some rotation action out of hot small-caps and into the lagging Magnificent Seven, and Bitcoin had a setback as the frenzy in MicroStrategy MSTR reversed sharply. Breadth was negative, with 3,800 gainers to 5,650 decliners, and new 12-month highs slid to around 640, down nearly 1,000 names.
While the speculative action slowed, there was still a long list of 10% movers and new highs. It was narrower, but it has been running hot for days now, and some things need rest. It is an interesting setup in front of the day before Thanksgiving, which historically has been very strong. Over the last 50 years, the S&P 500 has been up 78% of the time, with an average gain of 0.3%.
The technical setup is more difficult because of how extended many things are, and that generally leads to greater volatility. There are plenty of bears that are looking for an opportunity to fade the euphoric action.
If you aren’t a shorter-term trader, this is not an environment in which you will want to do much other than maybe lock in some gains. The potential for some hangover action next week is quite high, especially as we start looking ahead to the Fed’s December meeting.
The trend is still the bull’s best friend, but now is not the time to be complacent.
Have a good evening. I’ll see you Wednesday.
At the time of publication, rev Shark had no positions in any securities mentioned.
