Rest At A Minimum

The current rally has taken the S&P 500 up over 70 points from the lows in a period of two weeks. That makes the market short term overbought. Seasonality is strong for the first couple of days of December month but turns negative later this week. I expect the market to make a short term high in the next few days. At a minimum the market should trade sideways if not lower.

While I am cautious about the very short term, the intermediate term picture is not as clear. Sentiment indicators show that investors remain on the bearish side despite the recent rally and intermediate term seasonality favors the bulls. Normally I would say that this combination is enough to make me very bullish in the intermediate term.  But it is difficult to know what effect a change in capital gains rates will have in the last few weeks of the year. There is also the possibility that all the special dividends have  a positive effect on the market.

My plan is to use strength early this week to put on some hedges but to remain net long. It takes extreme optimism for me to get neutral or bearish at this time of year and we certainly are not seeing that.

4 comments:

jc1000 said...

I am seeing SPAM at the top of your page - links to drugs, etc. Please have someone look at the page source for that garbage right after the body tag. Thanks!

I read your site every day and agree about the hedges.

Tsachy Mishal said...

I dont see the spam. Where are you seeing it? On the RSS feed or on capitalobserver.com?

jc1000 said...

I've attached an image of what I see in FireFox with Page Style set to none, which is my normal viewing mode since I have vision problems. Search engines will find it and link your site to their spam.

Best regards,
Jerry

jc1000 said...

It's on capitalobserver.com  Find someone who know html; they should be able to find it.