Santa Ain’t Messin’ Around

The stock market bottom this week wasn’t as pessimism laden as the one in October,  but it was certainly fun nonetheless! And just like I did in October, I gave readers a few days notice to prepare for the low. Frankly, this was easy.

While it was a slightly soft seasonal time, the market sold off a few percent more than it should have which is part of the reason the rebound has been so robust. December is a haven for strong trends and several collided this week with a focus on Wednesday, Fed day. It was Santa’s turn to propel the market and boy did he deliver with the S&P 500 just a whisker away from all time highs to close the week. Yes, you read that right, ALL TIME HIGHS.

It was only a few days ago when friends, colleagues and pundits were all telling me that the quant models were wrong; bull market was over and stocks were not going to rally like they usually do this time of year. I don’t know; the bears are the ones who look to be the wounded party.

In any case, it was a great three days for the bulls, but now comes the time where I really want to see the Dow, S&P 400, Russell 2000 and Nasdaq 100 step up and grab new highs. If we fast forward to January and these indices are still lagging, I will certainly become concerned.

It was also good to see the high yield (junk) bond sector turn on a dime and take off. This group is vital to the long-term success of the bull market.

On the sector front, the news is less robust with plenty of sectors still not leading like I would like to see. As with the major stock market indices, let’s give them into January to get themselves healthier. Earlier this month, I sold our position in the transportation sector when it stopped rallying as crude oil collapsed. That sector needs to repair itself. Today, I sold half of our long-term position in semiconductors as they went from strong leader to laggard.

Have a good weekend and be safe!

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Paul Schatz, President, Heritage Capital
Paul Schatz, President, Heritage Capital
If you have at least $250,000 of investable assets and would like to schedule a complimentary meeting, call, or video conference with me, please click on my calendar here email me at Paul@investfortomorrow.com or call the office directly at 203.389.3553.

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