August 22, 2017

Turkey Day Rally?

Three out of the four major benchmarks that I follow are back in an oversold state. Moreover, the market has officially moved into a positive seasonal bias over the short-term.  

Last week I stated,

…historically the market performs very well the day before and the day after the holiday. The Stock Trader’s Almanac states, “long into weakness prior, exit into strength after”.

They go on to state:

“for 35 years the combination of the Wednesday before Thanksgiving and the Friday after had a great track record, except for two occasions. Since 1988, Wednesday-Friday lost six of eighteen times with a total Dow point-gain of 502.41 versus a Wednesday-Monday total Dow point-gain of 704.77 with only four losses. The best strategy seems to be coming into the week long and exiting into strength Friday or Monday.”

Given the oversold conditions and seasonal tendencies that exist I will be paying close attention over the few trading sessions. Volume will continue to lighten up as we approach the holiday, but this often allows for sharp moves. It will be interesting to see if the market experiences the another Turkey rally over the coming days. Have a great night!

Overbought/Oversold for November 19, 2007

S&P (SPY) – 29.4 (oversold)

Russell 2000 (IWM) – 24.1 (oversold)

Dow (DIA) – 26.4 (oversold)

Nasdaq 100 (QQQQ) – 34.7 (neutral)

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