It’s sometimes hard to believe that Wall Street is run by the actual adults. This is a world where silly songs, such as “Sell in May and go away” and “the trend is your friend” with a straight face said, seriously – more seriously than they should or at least. But perhaps my favorite is the “Santa Claus Rally.”
Yes, it appears the growth of men and women like the notion that St. Nick showers in their stock market gains ten year February gift.
But like most myths and sayings market, there is an element of truth there. December and January tend to be a strong month, with special attention around the end of the year. According to Adam O’Dell, chief investment strategist for the Dent research, “go long when the S & P 500 index strategy before Christmas week – especially 245 of the trading day of the year – and keep 10 trading day gives a positive return of 81% of the time. “
I do not know about you, but. I have no plans to bet on rising or falling markets than any given 10-day stretch farm. Many variables can swing the market either way, and Santa Claus rally is by no means a sure thing in any given year. Just two years ago, in 2015 on the occasion of the holiday season just came to see the Standard & Poor’s 500-stock index fell more than 13% of the market adjusted between November highs and lows.
However, as the figures show, Christmas and New Year holidays are usually a good time to invest.
Holiday how to play this year? Santa Claus will be generous, o R lumps of coal left to us? Let’s look at some of the possible swing factor no matter which way the market.
Assessment
We all know that valuation does not make sense in the short term, even though it can be said to be the largest single factor driving earnings in the long term. Apply value investing, Benjamin Graham’s famous icon idea of voting machines market in the short term, but in the long run weighing machines
But expensive, lively market – has driven in particular by a central bank stimulus – are at greater risk minors, healthy correction snowball into a real bear market
It is an expensive market? So, far higherThe current price earnings ratio, and index historical average of 24.8 15.7 S & P 500 is trading at 2.2 times sales – its highest point in at least 15 years
Tim Courtney, Exencial Wealth Advisors independent RIA CIO said his company is not the United States in 2009, as “sounding the alarm” its stability and liquidity, but did say, “If you look to expand your universe throughout the globe, you can make foam level view subsequently, the US market – particularly in the US large-cap stocks and growth companies – look at with respect to the alternative expensive “
Valuation may not be a threat to scream Santa Claus rally, then, but still I think this is a check mark column “Pooh liar” in.
Momentum and trend indicators
Momentum you should take more seriously than the valuation of short-term indicators. After 11 months, although slowly ST arted, most momentum indicators point to the general health of the bull market. “Trump card Rally,” If you want to call it, is very alive and well.
S & P 500 index is well above its 50– and 200-day moving average, you would expect to see in health, emerging markets. Market breadth – the number of stocks rising and falling stocks of how much – the latter has fallen, but still within the healthy range of small
Credit. Spreads recently, if this continues I might start a little worried. When the spread is narrowing, investors believe the economy will remain healthy and comfortable to accept a lower interest rate – but the rise of spreads reflects lower confidence repayment of investors. Now, though, this month KET look healthy, uptrend remains intact.
Thought it was a passion, “Ha, ha, ha.”
Political and macro risk
This is the biggest wild card. Just lower taxes, more easily adjust the outlook enough to wake the animal spirit of a whole year. But at some point, our government must realize the promise of these changes, which – so far – it’s mostly impossible
Trump government has been friendly energy companies and pipeline operators certainlyAnd it has been when it comes to the implementation of new regulations limiting uncharacteristically. In fact, for all intents and purposes, not really, because any new regulations Trump since he took office.
But also received a large-scale reform of the total ABSENCE. Health care reform bill died in the Senate informal death, as I write this, corporate tax cuts has yet to be fully adopted.
Months of hemming and hawing market has been at least partly due to fears that the tax cuts will wither on the vine, like health care reform. Yes, the House approved his plan to pass a sweeping bill and the Senate Finance Committee, the plan will be considered by the Senate after Thanksgiving. But as I write this article, Sen. Ron Johnson, R- Wis., Has come out against the Senate’s tax cuts, as well as several other members of the Republican Party are not yet considered a lock to vote the current iteration.
However, unless a complete collapse in Congress, do not expect too much else b oat rocks Washington. Progress in the transition to a new Fed chairman smooth, and tensions with North Korea seems to be slowly eased.
Without any apparent on the horizon, macro risk (or lack thereof) seem to point bounce Santa Claus.
Have accurate market do you expect it to do a fun way to reverse. But it looks like we are building the decent rebound this holiday season. So, let a little strong eggnog this year and enjoy it. We will respond quickly 2019.