"How January Ends, So Will The Year"
"How January Ends, So Will The Year"
Does anyone still remember this age old trading adage?
January 2015 ended badly... SP-500 ended about 2000 from 2050, the Dow ended about 17,160 from 17,820. Whatever happened to Santa Claus rally? Will 2015 end badly just like how the old adage goes? Well, January 2014 ended really badly and everyone was shouting crisis but 2014 still ended strongly, marking a 9th bullish year since 2009, the strongest bull run since before the tech bubble in 2000! So did January of 2010. So, does this mean that the adage is no longer true?
Well, I would be cautious in completely writing the adage off this year. Even though I do not see a market crash coming as bond yields are still way off market crash levels (but its already the 9th year people... stock market cycle anyone?), I do see that the market is overdue a significant correction the magnitude of what we saw back in 2011in order to digest some of these overbought sentiment. Indeed, the market has been going sideways in a volatile bearish inclined channel since December 2014. The bulls and the bears are still fighting strongly against each other, finding plenty of reasons for either side of the trade.
What do prudent directional traders do during this time?
Wait.
Indeed, with the market going either way, this is certainly not the time for high probability directional trading. This is also why my Master's Stock Options Picks service has been largely on the sidelines since December 2014. This is definitely the time to be patient, wait for a resolution of direction before trading strongly into that direction.
Does anyone still remember this age old trading adage?
January 2015 ended badly... SP-500 ended about 2000 from 2050, the Dow ended about 17,160 from 17,820. Whatever happened to Santa Claus rally? Will 2015 end badly just like how the old adage goes? Well, January 2014 ended really badly and everyone was shouting crisis but 2014 still ended strongly, marking a 9th bullish year since 2009, the strongest bull run since before the tech bubble in 2000! So did January of 2010. So, does this mean that the adage is no longer true?
Well, I would be cautious in completely writing the adage off this year. Even though I do not see a market crash coming as bond yields are still way off market crash levels (but its already the 9th year people... stock market cycle anyone?), I do see that the market is overdue a significant correction the magnitude of what we saw back in 2011in order to digest some of these overbought sentiment. Indeed, the market has been going sideways in a volatile bearish inclined channel since December 2014. The bulls and the bears are still fighting strongly against each other, finding plenty of reasons for either side of the trade.
What do prudent directional traders do during this time?
Wait.
Indeed, with the market going either way, this is certainly not the time for high probability directional trading. This is also why my Master's Stock Options Picks service has been largely on the sidelines since December 2014. This is definitely the time to be patient, wait for a resolution of direction before trading strongly into that direction.
posted by Jason Ng at 12:09 AM
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