Tis The Season

There is a lot not to like about this market. Most notably, while the market corrected sentiment stayed way too bullish.  The ten day moving average of the ISE equity did not even dip below 200 during the recent 4% correction. Readings above 200 are usually seen at tops.

However, seasonality is simply too strong to commit much money to the short side. According to data from SentimenTrader.com the last two weeks of November through year end have been positive in 80% of the past twenty years. The four down years all happened during major crisises. This is not the first time sentiment has been extreme at this time of year. I would argue that sentiment is extreme at this time of year almost every year.

I am not sounding the all clear as much of the data I look at is bothersome. But with such a strong seasonal tailwind the short side is even tougher than usual.

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