| “On the one hand, corners of the market are oversold,” Crisafulli said. But “the aggressive ‘buy the dip’ mentality, which proved so profitable for the last 1.5+ years, especially in the high-multiple corners of the market, was underwritten by a tidal wave of stimulus that is now receding.” Goodbye liquidity. Hello, uncertainty. That’s not to say buying today’s dip won’t work out, though. The S&P is trading near key support at the December lows. If the index can remain above support, a rally to the record highs could easily follow. But with Christmas fast approaching, the odds of a Santa Rally have declined considerably. Bulls may lose hope if one doesn’t arrive in time. And that might just be enough to push the major indexes below the lows of December as we head into January, where the seasonal tendency has historically favored bulls. Given the current investing climate, however, the “January Effect” might not arrive, either, and at a time when the bull market may desperately need a strong rally to stay alive.  |
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