Is Santa Claus Coming To Town?

The Thanksgiving and December rally happen frequently on the stock market. Even though the stock market trend this year has been a downward trend and stocks have fallen sharpen over the last few months, there was a strong rally during the Thanksgiving holiday week. Will the December rally also happen? No one can tell for sure. The saying “only death and taxes are certain” also applies to the stock market, in that it operates on probabilities and nothing is 100% certain.

Taking a close look at the daily Dow 30 index chart, one would conclude that the market is poised for an upside movement. However, because the weekly charts haven’t given an upside signal, any signals from the daily charts should be treated as short term. More evidence that there might be some upside movement is the Volatility Index (VIX). The daily VIX chart beginning to give signals of a downward movement, an indicator that the market is about to move up.

However, because we are in a bear market, we should consider any upside movement as short term or a pull back. In addition, to confirm the upside movement I would wait for Dow to take out the previous week’s high of 8827.

All the best.