The inauguration of President Trump seemed to spur the market this week, after a strong rally the previous week. $SPX has now advanced well over 300 points since its upward reversal on Monday, January 13th. In doing so, it has left three gaps on its chart. Short- term gaps like that are often closed fairly quickly, but the momentum is strong now. Another close above 6100 today would be a two-day confirmation of the new upside breakout.
The January seasonal trade is usually one our best seasonal trades (right behind the October seasonal). Typically, large fund managers will put money to work at the beginning of the year (hence, the positive seasonality of the January early warning system), and then complete their buying at the end of the month.
We have had some requests for more information on these types of ETFs, so here is the first attempt to answering those requests. In the last couple of years, several new ETFs have come to market that essentially write calls against a popular, volatile stock. The ETFs are not all constructed the same way, although there is a basic format to begin with. Sometimes, variations are made if the performance of the underlying stock is exceptional.
Much of what is written below was written a year ago, when the Santa Claus rally also produced a loss. At that time, $SPX rallied immediately from there and never looked back. But the analysis is still valid.
When the typical Santa Claus Rally seven day trading period produces a loss, it is generally a short term problem for stocks. This was stated, poetically, by the system’s creator, the late Yale Hirsch: “If Santa Claus should fail to call, bears may come to Broad and Wall.”
Time is running out to take advantage of our exclusive holiday special. Until December 24, 2024, you can subscribe to The Daily Strategist at an incredible 50% off.
This is your last chance to lock in professional-grade market insights and trading recommendations at half the price. Start 2025 equipped with the tools you need to trade confidently and strategically.
This holiday season, we’re offering an exclusive opportunity to elevate your trading strategy at an incredible price. For a limited time, subscribe to The Daily Strategist and get 50% off our premium newsletter service. But hurry—this offer ends on December 24, 2024!
The new trend of $VIX buy signal is the third one in the last year. The $VIX chart from Figure 4 is reproduced here, without the “spike peak” buy signals, so we can discuss these trend of $VIX signals.
First some background: a trend of $VIX buy signal occurs on the first day when both the 20-day Moving Average of $VIX and $VIX itself are below the 200-day Moving Average. Conversely, on the first day that they are both above the 200-day MA, that is a sell signal.
We have addressed this subject a few times in the past, but with the equity-only put-call ratios plunging to multi-year lows, it seems appropriate to take a fresh look and review what we know from the past. As noted in the market commentary above, the standard ratio is down to levels last seen in November 2021. The weighted ratio is at a new low for this year, which is about as low as it ever gets.
Navigating the market can feel overwhelming, especially with the constant ups and downs that define today’s trading landscape. But this volatility offers a unique opportunity for traders to turn unpredictability to their advantage. That’s why I’ve teamed up with top trading experts and Investing Target to bring you an exclusive ebook, Trade Secrets: Proven Strategies from Elite Trading Gurus.
