The market had been rallying for the past few days. It would be interesting to see how far the market indices could go by the end of the year. The market volume would be low this week till the end of the year.
Typically, a Christmas Rally is expected every year and it did not dissappoint investors most of the time.
Under normal conditions, I would long some of the strong stocks (or at least the stock index) during the Christmas holidays. However, for this year, I would be cautious with my trade during this period.
January Effect
This is another bullish trade. Typically, weaker stocks would go up during the first 5 days of January. Investment funds would sell their weaker stocks and buy better performing stocks by the end of the year. This was done to show that their funds invested in strong stocks (called window dressing). It was also done to offset their loss making stocks against taxes. During the first 5 days of January, these same funds would start to buy the weaker stocks (those they think would outperform the market) again. Because of the sheer volume involved, the weaker stocks would appreciate in price.
Personally, I am not sure whether this would happen. For the overall market, I am still bearish.
Basically, I am still looking for bearish play most of the time.
- PersianCat04 (Millionaire-in-progress)
No comments:
Post a Comment