“If your trading the last week of the year, you didn't make enough during the prior 51”
Anonymous
Santa Claus visited Mr Market this year as the market climbed to new all time highs for the first time since in two months. With New Years on Thursday we have a nice hand being delt for a solid holiday bump. As the holidays with the most bullish tendencies are Labor Day and New Years. During a period of 33 years, New Years was positive 31 times, with one even close and one down year. During this study of holiday trading, 223 pre holiday trading days were recorded. Of those, the market rose 193 times or 83% of the time. With the odds of the market rising on the day before a holiday were about seven out of eight times. The important pre holiday run ups were related to Easter, Memorial Day, July 4th, Labor Day, Thanksgiving, Christmas and New Year’s.
Santa Claus did a fine job already and statistically speaking, the odds are in our favor for New Years to repeat the favors. When it comes to holiday trading, if the market is closing bullish leading into New Year’s, it can be wise to hold long.
For this week the market closes early on Wednesday, is closed on Thursday, and opens on Friday for a regular day of trading. The Friday open after the holiday also increases the odds of positive price action compared to any other day of the week. There are some positive stats that we could see a further climb from the market in the new year. Where a chance to tag 700 in the S&P is a real possibility.
Where my focus continues to be on the Consumer Discretionary sector as a whole.
As this sector has set up and tried to break this all time high twice over the last few months, its now, back up at that breakout area again on extremely tight risk. This sector is currently showing the lowest risk for a potential blue sky breakout compared to its peers.
The talk of the market the last few days has been Silver. Due to the fact that after 20 years trading under its finanical crisis ATH, in the last month it has finally broke out and increased by 40%.
More recently, there has been countless people in the crypto space throwing in the towel and piling into physical silver after the major increase. Which is very similar to the lines of people who were trying to buy Gold a few months ago.
The masses will always chase what's already up. The lines around the block for Gold was when it was trading at the red arrow, not the green. Silver is the same right now, could it squeeze higher, of course. But it can and will eventually fade back to earth as we've seen with every mini bubble. If you start to hear the silver chatter, do not chase it with the crowd.
Going into the week, there are a few names setting up, yet I will be very selective and light, pretty much coasting into year end trading wise. The market is closing up around 17% this year and now is a good time to check the performace of your passive and active accounts to see how they stacked up.
I've spend the better part of the weekend reading through my last 8 years worth of business plans that I put togther at the end of each year. Where I recap what goals were exceeded, which I failed to achieve, how my businesses did throughout the year and the major lessons learned. Doing this, helps to form the guard rails and goals for the year ahead. Something quite frankly I would be lost without. When we know what we are striving for, we know what to celebrate or when we need to lock down and focus on the important task at hand. Without it, it feels as if progress never gets made becuase there is nothing to compare it to.
Here is the link of my 3% Rule template that I use to create my business plan each year. The 3% means that only 3% of you reading this will take the time to complete this, yet the 3% who do, will more then likely earn 10X more throughout your career compared to the 97% who say they will do it later.
Macro Rotation Outlook
