- The S&P 500 spent the better part of November jumping all over the place, but in the end, it seems as if consolidation is probably the proper term to use for how we have behaved.
- Ultimately, this is a market that has seen a massive jump from the lows in April, and sooner or later, that means we need some type of consolidation in order for the markets to “accept the current pricing.”
- Compounding this is going to be the fact that holidays are coming, so the month of December will more likely than not end up being a bit erratic.
Will the Santa Claus Rally Show Up This Year?
One question that I have is whether or not the so-called “Santa Claus rally” will show up this year. That’s a tricky one because this is a market that has rallied so much this year that it is difficult to imagine that there are a lot of people out there looking to chase performance. That being said, it doesn’t necessarily mean that there won’t be one; it just might be a little bit milder than usual. Currently, there are a couple of very obvious places that I am watching for potential support, and I do believe that this will end up being a more or less “buy on the dips” type of market throughout the month.
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One of the most technically important levels at the moment for me is the 6500 level, an area that has proven itself a couple of times in the past, and as long as we can stay above there, then I think you continue to buy dips. Obviously, if we can break out to a fresh, new high, then I think the next target to pay close attention to will be the 7000 level, as it is a large, round, psychologically significant figure.
As a general rule, traders tend to like to buy stocks if the interest rate situation in America looks like it is going to have cuts going forward, and that’s exactly where we are now. Furthermore, the artificial intelligence bubble is still a question, but if money starts flowing back into companies like Nvidia, the S&P 500 will more likely than not naturally follow to the upside. All things being equal, I’m bullish, but I also recognize choppy volatility could be an issue in December.
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