Will We See A Santa Claus Rally This Year???
Santa Claus rally, Yale Hirsch defined it in the 1973 Stock Trader's Almanac as:
Santa Claus tends to come to Wall Street nearly every year, bringing a short, sweet, respectable rally within the last five days of the year and the first two in January. This has been good for an average 1.3% gain since 1969 (1.3% since 1950 as well).
A week ago, I talked about an ETF by the name of AdvisorShares Ranger Equity Bear ETF (NYSE Arca: HDGE), HDGE. This fund attempts to implements a fundamental, research driven stock selection process based on forensic accounting techniques that short sell U.S. listed equities.
Hedge Your Portoflio With AdvisorShares Ranger Equity Bear ETF, HDGE (NYSE Arca: HDGE)
So why does Brad Lamensdorf, the manager of the HDGE feel rather bullish on stocks as we head into 2019?
He mentioned companies can once again buy back their shares after emerging from blackout periods of September and October.
He also mentioned funds are finished with the tax selling that recently weighed on markets and now should initiate buying programs to maximize annual returns after flat to downward performance so far this year.
On the ES (the futures market for the S&P 500), price has been range bound since late October and is bouncing off the lower end of the range currently.
However, last week, the infamous death cross formed, but according to some so called experts, hasn't been a good indicator for further break down in the Markets, in the past.
Then last week, we saw the arrest in Canada of Huawei CFO Meng Wanzhou. Meng is the daughter of one of founders of Huawei, the Apple of China which may put strain on the US-China trade war.
But then this morning, it was reported China is drafting plans to replace its industrial Made in China program, which has been at the center of the Trump administration's frustrations with Beijing. The new plan would aim to increase access to foreign companies.
I personally don't know if we will see a Santa Claus rally. One thing for certain, this environment has been great for day traders. And if you are a longer term trader, just wait for confirmation.
MERRY CHRISTMAS
This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
Window dressing will be weird this year given the performance of some of the large caps as well as the sector rotation occuring. There may be a rally but once earnings start it will probably fizzle quickly...
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