Sunday, December 02, 2018

A December to Remember

"The market moves in the direction that causes the most pain." ~ Wall Street adage

To me,the most pain would if the market advances 5-10% or more in the month of December.   That would cause a lot of hedge funds, pundits and some individual investors a lot of pain.   Then the algos will likely kick in and add more fuel to the advance.   That would lead to the FOMO (Fear of Missing Out) advance before the market would reach a near term top.

I know of hedge funds and individuals that have either sold most of their equities or are short the market.  An advance of 5-10% in a month would cause enormous pain.  Similarly, a drop of 5-10% would cause elation among this group.

The setup is in place for a great December:

  • Seasonality - Historically, December is the third best month for stock returns, and well know for the Santa Claus rally.
  • Interest Rates -  The Fed is likely to slow down interest rate increase in 2019.
  • Trade Wars - Trump has announced a short truce in the tariff wars with China.

My target for the S&P is to reach 3000 sometime in December.  I'll even go out on a limb and predict a 2018 close for 3000 or more.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial  or investing advice. Please consult a professional advisor.

Copyright © 2018 Achievement Catalyst, LLC

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