Keith Schneider | Dec 19, 2021 05:34AM ET
Investors anticipate the phenomenon that not only happens around most National Holidays, but especially during the Thanksgiving to Christmas season called “The Santa Claus Rally” on Wall Street.
This effect typically happens around December and retail investors wait with anticipation to take advantage of this “seasonality.”
h2 Why Does This Occur?/h2There is no definite reason, but the best educated guesses assume these factors make up this effect:
It very well could and with 2 weeks left before the beginning of the New Year, we may get a rally. So far, December 2021 has been a dud as far as Holiday rallies are concerned. But do not despair, we could get a very robust, rip-roaring rally yet.
However, as most of you know, most of our indicators have not broadcasted this. In fact, our indicators (gauges) have been saying the opposite. Something does not smell right.
h2 What Is Happening Now?/h2Lots of crosswinds. Inflation, COVID (Omicron), a Fed that appears to want to tighten (or at least taper), a potentially slowing economy, sky high multiples on many growth stocks and concern about what the financial markets in 2022 might bring.
This has led to one heck of a down week, but the most interesting thing to counter all the negatives is that Cathy Wood's ARK Innovation ETF (NYSE:ARKK) had a nice bounce on Friday and could be a lead indicator that the selloff might be overdone.
This is countering the Risk Off reading showing short term relative strength in Value stocks (VTV) versus Growth (VUG). (For more on this check out Mish’s interview on stock charts)
We lay out the Big View scenario as follows:
h2 Bullish/Risk On/h2
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