Seasonality should begin to take over tomorrow

December 21, 2006 · Print This Article

The higher-beta Russell and Nasdaq 100 have once again reached oversold territory and conveniently right as the year-end seasonal bullishness historically begins. That was a mouthful! QQQQ is back near an important area of support and given the strong seasonal bias that lies ahead I think buyers will step in over the next few trading days to push the market back near the recent highs. SPY has also reached a similar level so both should be watched closely over he next day or so. If the market is unable to hold support then we could see a Christmas correction that most likely will last for several weeks. I am not expecting to see this type of action as buyers have recently been very reliable when the indices have reached strong support areas. Couple this with the strong postive seasonality that I mentioned earlier and I think we could get a nice push over the next few days.

RSI Wilder (5) for December 21, 2006