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Seasonal patterns can be important… when the technical background agrees with them. The odds of the market being up the last two weeks of December are 75% – it doesn’t get much better than that. Stocks above their 200-day average are close to 60%, near the upper end of the range most of this year. We’d rather 70% more in keeping with most bull markets, but this market has compensated with rotation. So, the odds of the so-called “Santa Claus rally” and even a “January effect” seem good. The latter is the tendency for the down and out to rally at year end. While it does not quite fit the pattern, Nokia (NOK -7) is down a bit and pretty much forgotten. And it has formed a base just above its 50-day average. Meanwhile, in keeping with the season, if you have been a little you know what, you might get ahead of the curve and at least pick a Coal stock with a good chart, Alpha Metallurgical Resources (AMR – 209).
Frank D. Gretz
PLEASE NOTE: Unless otherwise stated, the firm and any affiliated person or entity 1) either does not own any, or owns less than 1%, of the outstanding shares of any public company mentioned, 2) does not receive, and has not within the past 12 months received, investment banking compensation or other compensation from any public company mentioned, and 3) does not expect within the next three months to receive investment banking compensation or other compensation from any public company mentioned. The firm does not currently make markets in any public securities.
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