Here’s why I’m expecting a pullback
The strong seasonal bias
combined with an indication that rate cuts may be near an end allowing the rally
to continue the last two days. The rally remains strong but is
becoming seriously in need of a pullback. Breadth remains terrible. Price is
extended. Sentiment is overly bullish. While none of this is new, I’m beginning
to feel that things have gone about as far as they can go without a pullback.
The Friday after Thanksgiving is typically
strong, and good news on the retail front could ignite another swing up early
next week, but I would look for a sharp pullback to ensue sometime in the next
5-10 trading days. More likely sooner, rather than later. I also believe that
the upcoming pullback could provide some terrific buying opportunities. If you
are not heavily long already, a little patience may pay off.
I’ve traded the Friday after Thanksgiving for
several years, so let me tell you how it works. The market opens at 9:30.
Trading takes place for about 20 minutes. After that, the bids and offers just
sit there and stare at each other in a Tryptophan induced daze. Occasionally, a
big player will notice everyone else is asleep and try to move a stock to their
advantage. At 1 pm the closing bell goes off, waking everyone up and sending
them home. It’s a good day to trade very passively, since follow through on most
anything will be poor.
Keeping it short today…enjoy your Thanksgiving,
Rob
For those who may be looking to expand their
knowledge beyond just market timing, my
Hanna ETF Money Flow System utilizes the VIX in generating trading
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Rob Hanna is the principal of a money
management firm located in Massachusetts. He has spent the last several years
developing and refining methods for trading in stocks across multiple time
frames. He selects stocks using both fundamental and technical criteria, and
then trades them using technical analysis techniques.