Sugar Coated January Returns
The market is now back to short-term neutral territory. A healthy bull market would have held the intra-day gains yesterday and closed near its highs but a higher close is a step in the right direction. With today being the last day of the month, the historical bias is to the upside to best sugar-coat the months returns. A lack of follow through today will be viewed as an additional ominous sign
The one thing that’s going in the markets favor is high very short term volatility. You can feel the skittishness amongst retail investors and investment advisors with VXX declining only 1.7% for the day yesterday. They’re the ones who are usually on the long side of this instrument and we all know the history of how well this instrument has panned out for them.
With so many global markets under their 200 day ma, it’s very important that the market holds here and begins its next stage higher. Otherwise the US will join the global bear and we’ll begin adjusting our signals accordingly to best take advantage of prices.
Have a great weekend (and enjoy the Super Bowl)!