December is a Month Rife with Crosscurrents… Unlike the Rest of Them?

DJIA: 48,704

December is a month rife with crosscurrents… unlike the rest of them? December does have more than its fair share of reasons for confusion, among them the tendency for the worst to turn to first in anticipation of the “January effect.” And leaders often tend to underperform. If there is a confusing side, there is a positive one as well. December is a good month for the averages, and in years following an election they are some three times more likely to go up and three times as much. While just probabilities, the recent action seems to back this up. The bit of a breadth surge seen at the end of November likely cleared the air following some weakness, and set the stage for year end.

A recent Bloomberg piece described Target (TGT – 97) as having gone from first to worst. Knowing retail generally to be a laggard, we were surprised to see the Target chart wasn’t bad. Speaking of not bad charts, when did you last look at Kohl’s (KSS – 24) with a recent gap and now a high-level consolidation. And there’s Macy’s (M – 24). Of a different sort, discounters like Dollar General (DG – 133) and Dollar Tree (DLTR – 130) were the market stars last week, now a little stretched but certainly worth a look on weakness. Change like this doesn’t go away in a hurry. Apparel retailers like Gap Inc. (GAP – 27) and Abercrombie & Fitch (ANF – 110) also look attractive. We’ve wondered too, what does it mean when after decades Walmart goes NASDAQ versus NYSE? Possibly a recognition that it’s more Tech than Retail?

Frank D. Gretz

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