Last week’s selloff left chronic market-chasers with a big lump of coal before the holidays. But as I’m about to show you, there is plenty of reason to be optimistic going into the “Santa Claus Rally” period that starts this week.
Not only am I pleased that the market’s consensus is no longer bullish, but there’s actually been some improvement internally in terms of relative strength.
Here’s what I mean…
The Bread and Circus of the Markets
Every sector in the S&P 500 finished lower last week. While this may scare your average trader or investor, I don’t think you fall into that category if you’re reading this blog.
Whenever the market drops, it gives us the opportunity to look at what sectors are holding up best, and more importantly, stocks within those sectors that are holding up even better.
The fact is, the tech sector sold off least last week. This is a very encouraging sign because technology is known to be a leading indicator for the market. Plus, we have a rule where we look for sectors that sell off the least to eventually rally the most once the market turns around.
And we know how the index will tend to behave if tech is rallying the most. This is a very strong sign going into 2025.
Wishing you all a Merry Christmas and happy holiday season, and I hope to see you on Thursday!
Talk soon,
Gianni
