Tax-loss selling may be starting late, but we know which area of the market we want to Avoid while it progresses.
*** Stocks highlighted are for information purposes only and should not be considered as advice to purchase or to sell mentioned securities. As always, the use of technical and fundamental analysis is encouraged in order to fine tune entry and exit points to average seasonal trends.
Stocks Entering Period of Seasonal Strength Today:
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Super Simple Seasonal Portfolio
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The Markets
Stocks reversed early gains on Wednesday as portfolio managers conduct their end-of-year re-balancing before looking to step away from their desks for the holidays in the days ahead. The S&P 500 Index shed 1.47%, showing the largest single session decline since the end of September. The reversal session from gains early in the day to a sharp decline at the closing bell alludes to buying exhaustion, precisely at a time of year when prices typically elevate during the notorious Santa Claus rally period. Near-term risks had been present coming into this timeframe after recording some of the most overbought readings that we have seen in years, making the market vulnerable to a quick gut-check. The Relative Strength Index (RSI) has fallen back below 70 and MACD is showing signs of converging on its signal line, again, both providing compelling sell signals following the significant market rally since the October lows. While this short-term signal leans negative for the market, we currently do not have the trigger from an intermediate/seasonal perspective to suggest abandoning risk, yet, but that could come as soon as the start of next year. Resistance at the all-time high of 4800 warrants ongoing scrutiny.
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Seasonal charts of companies reporting earnings today:
S&P 500 Index
TSE Composite
