Seasonal Tailwind This Week

Stocks begin the holiday-shortened Thanksgiving week with an upside reversal last Thursday and a little bit of follow through on Friday. Stocks continue the process of repairing the internal damage done by the October correction before assaulting Dow 27,000 in the New Year. However, I want to be clear; at this point I do not have strong conviction that last week’s reversal is the final nail in the market’s bottom. I can still see two diverging paths to new highs as I wrote about last week in Bulls Making a Stand.

This week has another seasonal tailwind with the week of Thanksgiving on top of the November & December tailwind which is on top of the November through April tailwind after a mid-term election. Remember, they are all just tailwinds and not market drivers. The market is SUPPOSED to rally this week. I think the most important thing to watch is if it doesn’t rally. That would give some credibility to the case that more downside lies ahead before the drive to new highs gets going in earnest.

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Paul Schatz, President, Heritage Capital
Paul Schatz, President, Heritage Capital
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