August 19, 2017

Seasonal Tendencies and Next Week

The positive seasonality that typically occurs around Thanksgiving has yet to rear its head. I reported earlier this week about the bullishness that precedes and follows Turkey day. We still have Friday, but given the shortened trading day on Friday my guess is that gains, if any, would be limited. The day before and after the holiday combined, only experienced 9 losses in 54 years. The market would have to rally sharply Friday if the market has any chance of increasing the overall winning trades that typically surround the holiday. 

With the exception of the Nasdaq 100 (QQQQ), all of the major indices we follow are back in an oversold state. Moreover, several of the indices, particularly the Russell 2000 (IWM), are sitting on key support levels. Oh yeah and one more thing, next week brings an overwhelming amount of seasonal bullishness.

According to the Stock Trader’s Almanac, November 26-29 are seasonally bullish with the S&P finishing higher Monday (66.7%), Tuesday (81.0%), Wednesday (61.9%) and Thursday (71.4%).

Combine all of the scenarios above and the probability of a short-term bounce (1-3 days) increases dramatically. Of course, we must remember there are no guarantees in trading, all we can count on are probabilties.

Have a wonderful Thanksgiving!

Overbought/Oversold for November 21, 2007

S&P (SPY) – 25.3 (oversold)

Russell 2000 (IWM) – 21.2 (oversold)

Dow (DIA) – 23.3 (oversold)

Nasdaq 100 (QQQQ) – 31.7 (neutral)

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