Rev Shark: Without a Care in the World
12/23/2010 9:00 AM
What is Christmas? It is tenderness for the past, courage for the present, hope for the future. It is a fervent wish that every cup may overflow with blessings rich and eternal, and that every path may lead to peace. --Agnes M. Pahro
Today is the last day of trading before the Christmas holiday, so it's no surprise that many market players have their minds on other things. The action is not only slow but, compared with other times when the S&P 500 has sat at an annual high, the intraday trading range Wednesday was one of the smallest in the last 17 years, according to SentimenTrader.
That sort of narrow range does not make for very interesting trading. It is even more challenging when volume slows for the holiday, and when the little action that does occur is quite random.
The market has lately been an excellent illustration of the power of momentum. Despite many good reasons for some weakness, stocks just continue to plod along without a worry in the world. For the bears who are convinced that this relentless uptrend has to suddenly end at any moment, the positive sentiment that tend to prevail around the holidays and near the end of the year just make matters even more difficult.
On a day like today, when volume is set to be very light and we are seeing some very overbought stocks, it is going to be particularly difficult to do anything very aggressive. There is just too much risk of random action.
One of the easiest ways to have problems is to put too much stock in seasonality. Seasonality is an inclination and not a certainty -- there have been many times when traders have looked to the calendar and have found themselves on the wrong side of the action. We saw a great example of this in September and October, when the market went straight up despite the statistics that show those months to be the weakest of the year.
At the moment, we are seeing a mixed open on the way. My game plan is to look and see whether the hot money is gravitating toward anything in particular, as well as whether there may be a quick momentum trade.
Today is not the day for big moves or grand predictions. It is a day to do little. If you can find a quick trade or two, then take them if you are so inclined, but otherwise just keep on an eye on existing positions and don't let them slip too much.
A number of economic reports have hit today, and they are generally in line, so the market has registered little reaction to them. A couple if takeovers were announced this morning but, overall, the wires are fairly slow.
In case you are heading out early today, I wish you a Merry Christmas and a happy holiday.
