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Ribbon and Bows

No full trading trading days left this year. For the week, the markets are closed on Friday, and trading is shortened on Thursday. The same will be true the following week. So this blog will be similarly short…

During short trade weeks – especially around major holidays – it’s not uncommon to see trading volume drop and volatility climb. Historically this could be explained by fewer traders physically being on the trading floor. Today so many trades are placed by computers and algorithms this may not be as much of a “thing” as it used to be. Nevertheless, with mechanically fewer days left to trade, it’s likely the markets will not materially rise or fall from here.

You’d think with a stimulus bill muddling through Washington the markets would be more excited. But no, futures are negative for the open on Monday. It seems the concern is now about a different mutation of Covid spreading across the pond. Will this render the vaccine ineffective? (If so, things could get ‘interesting.’) It’s quite early to tell. However, the ‘what if game’ is enough to make the markets marginally worried at the open today.

For this week, just look back to last week. Odds are very high we’ll trade between the highs and lows — so a low of 3645 and a high of 3725. Should a bid emerge resistance would be about 3760.

So there’s not a ton to talk about. Yes, DC got some stimulus passed. There’s not a ton that appears to be ending up directly in the hands of consumers. So there are still lots of questions to be answered. As clarity emerges perhaps the markets will become more optimistic. For now, it looks like markets will bounce around in a similar range to the last three trading weeks or so.

In short: the Santa Claus Rally may be about over…

Hurray… next we can talk about the January Effect! (So many superstitions, so little time)

As a random aside: today is the shortest day of 2020 in the northern hemisphere… winter solstice. Just a bit of reminder trivia there, too.

For bragging rights… the projections created on 1/9/2020… which have been unaltered for the year (despite Covid)… were for the S&P 500 to close at 3577, with an extreme price target of 3770. (It’s looking like those projections faired pretty well this year.)

And that’s it… we’ll keep it short because it’s a holiday week for this author too.

Wishing you a wonderful Holiday season, Happy New Year, and from my home, a very Merry Christmas. Cheers!

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

S&P 500 projections for the week of 12-8-2020

Santa Still on Approach

With the S&P 500 still shooting for a 3800+ print in 2020, the Santa Claus Rally looks like it’s still on.

It may sound crazy, but volatility could continue to decline in the near term as markets slowly grind higher into record territory. There simply isn’t a significant amount of news between now and the end of the year that looks like it will derail this thing. And mean reversion is likely not reason enough on its own to lead to much more than some intra-week down trading days during a broader trend higher.

(Did that make sense? Basically, the market seems to want to go higher, but on any given day some trading could lead to a negative print here or there. It just doesn’t look like much more than that: trading. The secular up-trend still looks strong.)

This is not to say black swans don’t exist. And this is not to suggest the markets could not find a reason to get fickle and decline. (They could and certainly have before.) It’s simply looking at the data, the trends, and trying to gauge the amount of uncertainty the markets are trying to contend with.

The trick is, most of the contingencies looks like up-side surprises. With much of the country still quite locked down, the questions are more about whether or not additional stimulus is going to happen. Taxes and other policy changes are still taking a back seat for the rest of 2020. (But don’t you worry, we’ll get a chance to freak out about that stuff in Q1 of next year.)

So, at least for now, it appears most of the current negative news in the world is already priced in. That leaves more positive surprises than negative in the short term, hence the high probability the markets grind higher from here.

The number to watch on the S&P 500 continues to be 3800. The downside support area looks like 3644. If this level fails to hold, the 3600 level could be tested.

A close below 3600 for the week would likely end the rally for 2020 and set up a test of the 50-day moving average and a sideways trading range for the rest of the year. The odds of this occurring look relatively low at this time.

A look under the hood of the BigFoot Database shows the DJIA just got a new buy signal. This means the S&P 500, DJIA, and NASDAQ all have buy signals in the system. The database itself is almost 85% long, with almost 85% of those long positions having buy signals (the others are wait signals). In short, volatility is on the decline, and stocks have been on the rise. Unless something surprising happens, Santa Clause should still be coming to town!

The technical setup looks like the Santa Claus Rally should continue.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Early Signs Indicate a Santa Claus Rally

For all the pain 2020 has caused, it looks like there may be one more gift this year: a Santa Clause Rally?

Let’s skip the suspense of fundamental musings – after all, none of us can predict the future. instead, we’ll look at the quantatative data. What’s it suggesting may play out?

The technical pattern unfolding under this market is showing surprising strength. First, all but the DJIA indexes have regained their buy signals in the BigFoot system. This suggests volatility is on the decline (and perhaps uncertainty as well).

The individual signals on the indexes are a positive sign, but a look under the hood of the BigFoot system reveals even more news. Currently the system is monitoring over 11,700 positions, and over 83% of those positions have long signals. About 2/3 of the long positions have buy signals. And the number of buy signals has been increasing throughout November.

The increase in buy signals in the BigFoot system reflects declining short-term volatility in the system. This makes sense in the larger context of the markets. November may outpace August for monthly gains.

Looking ahead, it seems unlikely the markets can maintain the pace of November for the end of the year. However, the technical pattern suggests the month of December can be positive and move higher from here.

There is a lot of underlying strength in a number of trend lines. The 50, 100, and 200 day moving averages are all positive. Linear regression trackers are all positive. The slope of the quarter, month, and weekly trading trends are all positive. In short, there are very few trend-tracking data points a computer algo can use to get bearish right now.

Some analysts may suggest the market is over-bought here. While the data does imply this, (we’re over one standard deviation above the last month’s trading range now) there are other influences that need to be considered. First, the upward move has a lot of technical trend strength. This pattern indicates we could extend higher for several weeks, remaining in the over-bought area for longer than expected.

Second, the sequence or returns – with August being strong, September and October being weak, the November being strong again – have enough wide swings to again throw off many trading algo’s. The patterns just don’t quite conform in the short-term.

It’s the intermediate term that looks promising. It’s long enough to show a positive pattern, but short enough not to look much past Q4-2020. It even makes a little sense.

Between now and the end of the year the fundamental story is promising. With the Georgia Senate race undecided, the most extreme Biden tax plans are on hold (assuming the Senate doesn’t flip blue). So markets look to the end of the year, with a stimulus-friendly administration walking into the White House, and a likely Covid vaccine rolling out soon. Both of these should bolster market sentiment for a few more weeks given no additional data. And neither should change the Fed’s policy approach.

Then there’s the untold story. It’s the end of the year. Many Wall Street analysts pegged 3800 as the number for S&P 500 2020. And bonuses are on the line. (So the cynic in me is watching for a rally to make sure those traders and analysts hit their holiday bonus numbers).

Of course, it is 2020. So literally anything could happen. Earthquake? Volcano? Ice age? At this point, only the boldest of us would rule anything out. But, statistically, the outcome looks positive. So, at least for now – for December – some hope remains that we can finish strong.

S&P 500 going to 3800 is still not out of the cards for the year. For the week, it looks like a slow start, with futures suggesting a negative open. This wouldn’t be surprising after last week’s Thanksgiving-shorted trading session. Once traders re-position a bit for the home stretch of the year, we’ll see if markets don’t find some traction.

So be good boys and girls. We’ll see if the market brings a present for the end of the month, or if 2020 delivers another lump of coal.

The Holidays Are Here (???)

Don’t look now but the 2020 market season is in the final innings. It’s Thanksgiving week and the unofficial start to the Holiday Season.

Will a Santa Claus Rally be in the cards to end 2020?

Well, the crystal ball is pretty dinged up this year, but the signals look positive.

Behind the scenes the BigFoot database has subtly regained a bunch of long positions. It now stands at over 79% long. All the major indexes are long, with only the DJIA showing a wait signal (which will probably flip to buy if the week ends on a positive note).

Signs point to a bet the economy is going to continue to reopen. It’s a risky bet. But the vaccine hopes seem to be outweighing the lock-down fears… for now.

Fear is probably the right acronym for 2020: Future Events Appear Real.

At the start of the pandemic, the concern was that death rates would skyrocket into the millions. Projections suggested as much as 4-to-5% of the population could die (these were the extreme projections of course). The numbers have been sensationalized ever since.

While Covid cases continue to rise, the improvement in medical capacity, therapeutics, and testing have shifted expectations mightily. The markets seem to be doing a good job of looking past some of the hype and digesting the numbers more pragmatically. (Markets themselves are dispassionate; market participants, on the other hand, can be quite opposite.)

Pragmatically, Covid case numbers were expected to rise as testing increased. Also, Covid figures were expected to play a roll in the election cycle. So some of the data was viewed as more sensational than other.

What the markets seem to care most about is whether or not the economy will stay open, whether or not the Fed is going to change course, and
whether or not there will be more stimulus… probably in that order.

So far, the only parts of the economy that are shutting down are the parts that never really re-opened that much… the west coast (where governments are instituting restrictions on gathering for the Holidays). The next few weeks will be telling to see how many people defy these orders.

The key metric seems to be less about Covid cases than hospitalizations. This was, of course, the original concern. It wasn’t going to be “if” you got covid, it was going to be ‘when.’ And policy was designed to “flatten the curve” to keep hospitals from being overwhelmed by covid caseloads.

As holidays undoubtedly lead to increased gatherings, keep an eye on hospital caseloads. That is the gauge most likely to indicate additional shut-downs.

For now, markets seem relatively convinced the caseloads will remain manageable and additional stimulus is on the way. And the markets seem to be looking higher as a result.

For this week, look for a positive trading trend. It’s a shortened week, with markets closed on Thursday for Thanksgiving, and then a half day on Friday. So volume will be lower. And typically market direction gets exaggerated somewhat on lower volume days.

It seems unlikely we’ll post new all-time highs after last week’s marks. But it does appear likely the markets will find a foothold this week and climb back into the upper end of last-week’s trading range. The SPX target for the week appears to be 3640.

It’s the following four weeks that could get exciting. If markets believe in the re-open trade, there could be more rebalancing from big tech into other areas of the markets. This could life indexes like the Russel 2000 in the remaining month. And the S&P 500 could yet surprise… the 3800 target is not off the table by year end.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Santa Said Risk On (But for How Long?)

It’s been a fantastic rally for stocks over the past couple months as Santa Claus was coming to town. Now is where things get interesting.

As discussed, last week was really the last full ‘trading’ week of the year. With the Christmas and New Year’s Holidays happening mid-week you can count on lower trading volume for the rest of the year. And more than likely, the participation will be light (don’t want to mess up those bonuses for portfolio managers).

To top it off, news on the ‘trade war’ is positive this morning as China says they’ll reduce or eliminate tariffs on a number of goods in the new year in anticipation of an inked trade deal in the near future.

This news has been greeted with optimism in the futures markets as the major indexes appear poised to push to even higher all-time highs. What a (calendar) year for the stock markets! (I’m sure we’ll get a pile of statistics to chew on in the coming days and weeks – best market since 2013, etc etc).

But before you pop the cork and celebrate, a word of foreshadowing: on the technical front, this market is way over-bought (at least by metrics we typically track). And on top of that, the multiple on earnings has crept up pretty high.

Fortunately, word on the street is still pretty skeptical. But we’re seeing Wall Street pundits raising estimates and there is a lot of chatter from the retail investor about how great things are (even if they’re still nervous about the economy going into an election year).

It’s precisely these times one should be careful about getting sucked into emotional euphoria land.

Warren Buffet famously said you should be fearful when people are greedy, and greedy when people are fearful.

Well, this is a tricky spot. The major indexes have had huge moves in 2019. The temptation to chase performance and pile into big winners is like a Siren’s call for many. And the technical set-up is concerning as we’ve seen this market not only gap higher late last week, but it’s poised to do so again at today’s open.

We’re at two standard deviations above the 21-day trading average for the SPX. Based on the futures markets, we’ll go even higher that that this morning.

It’s no guarantee that the markets pull-back from here just because we’re over-bought… or in a shortened trading week… or because we’ve had likely two price-gaps higher in the last two trading days… or because we’ve had huge calendar-year profits for the year… or because traders want to start positioning for Q1-2020… or a host of other reasons…

But you get the idea… markets have a lot of reasons they could pull-back from here. If they don’t, it may be time to start revisiting Warren Buffet’s old saying again. Because if there’s no fear in this market, maybe there should be.

Then again, for you BigFoot users, this is exactly why we have a process instead of just using our gut. Sure, there are no guarantees in the world. But having a systematic approach to analysis and following a set of rules and rationales leads to more consistent behavior. That means fewer variables, and higher statistical predictability. Or, said another way, it helps reduce the potential for human errors by quarantining some of the emotions that often lead to poor decisions. So tell a friend – or if you’ve stumbled upon this blog for some other reason, give us a ping. We’d love to walk you through the system and show you how to put the power or both artificial intelligence and neural networking to work in your investment process.

Looking pretty over-bought here
There may be further to go, but the air is getting pretty thin up here

As a head’s up, next week’s blog will be pretty minimal. As is the norm for this time of year, I will spend some time pulling together data and doing annual projections for 2020. I will probably do a brief year-in-review snapshot as well. It’s pretty easy though – markets exceeded my expectations because earnings exceeded expectations. It wasn’t a major miss (I had a high for the year at 23% return – we’re currently around 27% on the SPX), but I was surprised to the up-side. Now that I think about it though, should I even say this? Don’t want to jinx things in the last few trading days of the year…

Thanks for continuing the read these musings. I hope you have a wonderful holiday seasons, a Merry Christmas from my household, and a Happy New Year as we step into 2020. May you as blessed as I have been…

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Home Stretch

This is the last full trading week of 2019. It may also be the last big push of the year for the markets to move higher.

If futures markets are any indication, there should be a pop Monday morning. This may create additional momentum for the week, pushing the SPX up over 3200.

Given the unusual holiday schedule (with both Christmas and New Year’s on Wednesday), this may very well be the high-water mark for the year. Still, as far as the calendar YTD performance goes, it’s been a heck of a year already.

There really is no ‘resistance’ on the upside right now. With markets essentially at all-time highs, the question is just how high can things go?

And things may go higher than we thought. With trade war talk softening, some of the pricing expectations may be off. IF — and it’s still if at this point — the trade war is going to soften, earnings expectations could benefit. That could mean this bull has room to run. 2020 may be an interesting year…

As far as support goes, around 3130 for the SPX. If this level is breached there may be some additional downside. Odds are portfolio managers are trying to sew up their bonuses for the year, so it doesn’t seem terribly likely we’ll have the bottom fall out of the market.

So while there is never a ‘known’ future for the markets, the set-up looks pretty good. It would take a major shift in market expectations to really throw a wrench in this thing. Folks seem to be asking how much higher this market goes rather when will the next drop happen. So grab some eggnog and cross your fingers – Santa Claus is coming to town 🙂

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Sleigh Bells

If you ask the markets, Santa Clause is still on the way, and this rally is still in play.

The technical trends are pretty straight-forward: economic data remains in-line with expectations, and Fed policy is unchanged. It’s a recipe for more of the same. And ‘the same’ happens to be a pretty low-volatility climb higher for the major indexes.

While this run has been exceeded initial expectations, the behavior of things looks like this week may continue higher.

Mechanically, we could see the top of 2019 this week. This is because both Christmas and New Year’s fall on Wednesdays. That means this is really the last ‘regular’ trading week of the year. After that, holidays monkey with stuff.

So enjoy for now. Q1-2020 is bringing not only new earnings, but new speculation as we head into an election year during the greatest bull market in a generation.

For the week, look for support around 3117, with resistance around 3179… if there is any resistance. The only reason the market hasn’t pushed higher is because it’s already at all-time highs.

C’mon Santa Claus Rally!

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

How High from Here?

Last week managed to finish at all-time highs for the SPX. The question now is how high can we go?

While there is no pre-defined limit, our original 2019 projections had 3100 as a likely target. Given current momentum, the SPX may exceed this level either this week or next.

The question will then shift to whether or not we can hang on from here.

If history were to repeat itself, we’ll likely see a bit of a pull-back coming once this initial target is met. The fourth quarter can be tricky though, as holiday rallies are tough to anticipate.

Given the shift away from a more traditional “Black Friday” sales event, it’s possible the big move for this market is happening right now. It’s typical for holiday schedules and window dressing to make for a dicey December.

2019 has been a remarkable calendar year in terms of market performance. Of course, it was a sand-bagged number as the fourth quarter of 2018 really tanked. The technical set-up does not have a major meltdown manifesting in the data yet though. So we may finish with a pretty strong calendar year from here.

Below is a chart of the 2019 projection. Note that 3110 was at the top of the expected range. This does not mean the markets cannot get into rally mode and push past this. It only means the markets would be ahead of expectations – and perhaps a bit over-bought at that point.

The pull-back targets are of bigger concern for most professional investors. How far back is an expected pull-back? Key levels from here would be: 3024/3014/3000/2974/2944.

To put these numbers in context, it’s about a four-percent pull-back. That’s not exactly huge given the moves this year. (Although it would definitely take some of the fun out of things.)

The good news is the end-of-year low target is still about 3010. That’s pretty solid support for this trend.

We’ll see if the Santa rally pushes us to even higher all-time highs. For this week, look for those numbers to push higher.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by BigFoot), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from BigFoot. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the BigFoot’s current written disclosure statement discussing our advisory services and fees is available for review upon request.

Don’t expect much from a three and a half day trading week. Holiday weeks like this traditionally mean lower trading volume – and often higher volatility. Given the most recent few weeks in the market though, sentiment seems to be shifting. The Q4-Santa Claus Rally is in danger of passing us by. Post-Thanksgiving we’re really only talking about four more weeks of trading for the year when you consider window dressing, capital gains reporting, and the other holidays that will keep people home and away from the trading floor. Given the lack of trading momentum headed into this week, this market may not have much left in the tank.

This week should be a decent tell for the remainder of the year. Watch to see if the markets can find support above 2715. Otherwise, this market may find itself on Santa’s naughty list for the rest of the year.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
professional advisor of his/her choosing. BigFoot is neither a law firm nor a certified
public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.

Retrenchment

Thank you Veterans.

And for the rest of us market jocks, what’s the scoop for the week?  Look for retrenchment above SPX 2750.  In fact, look for 2800 this week as markets seek to find footing.

While the 200-day moving average should form some support, futures trading has been eradic over the weekend.   At first, futures showed a higher open.  But things swung to the downside as Europe opened and oil prices pushed higher.

This kind of pricing behavior is not necessarily predictive of anything other than folks repositioning over the weekend.  And since the range for the repositioning was relatively narrow, it may simply be noise.  Given last week’s strong move higher — after a 10% correction for most indexes — and a ‘nearly’ completed election — it looks like the markets are poised to start reclaiming some of their last ground from October.

One of the growing concerns is in the housing market.  Keep an eye on that in the coming months.  While stocks remain attractive relative to everything else, the housing market slow-down may be a sign that this almost-10-year economic expansion is feeling the affects of higher interest rates more than folks may care to admit.

It may sound funny, because mortgage rates in the 5’s are still historically low.  But, compared to mortgage rates in the 3’s, they’re some 30% higher than they used to be.  For folks that have never known higher borrowing costs in their lives (save credit cards), this could be a legitimate point of contention.

As a housing market aside, it’s going to be very interesting to follow what comes out of the massive forest first in California.  Not only has there been loss of life.  There’s been massive loss of property (which may actually be stimulative for the housing market).  There’s been massive strain on infrastructure.  And it’s called to the forefront some of the questionable Federal forest management policy that’s lead to these massive fires.  (Admittedly, this is something personal for me as the Pacific Northwest experiences fires every summer.  However, with only 4 million or so people in Oregon, there are not enough votes to seem to move the needle much in Washington.  But have this happen in California, and now we have your attention.)  Federal changes in forest management could potentially unlock a lot of value in timber.  If this were to happen, the housing markets would need to be reexamined.

Look for some early volatility this week as markets find their footing.  As long as the SPX stays above 1750 or so a recovery trend is still probable.  A close below this level and we’ll have to reconsider whether the Santa Clause rally is really coming to town.

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different
types of investments involve varying degrees of risk, and there can be no assurance
that the future performance of any specific investment, investment strategy, or product
(including the investments and/or investment strategies recommended or undertaken by
BigFoot), or any non-investment related content, made reference to directly or indirectly
in this blog will be profitable, equal any corresponding indicated historical performance
level(s), be suitable for your portfolio or individual situation, or prove successful. Due
to various factors, including changing market conditions and/or applicable laws, the
content may no longer be reflective of current opinions or positions. Moreover, you
should not assume that any discussion or information contained in this blog serves as the
receipt of, or as a substitute for, personalized investment advice from BigFoot. To the
extent that a reader has any questions regarding the applicability of any specific issue
discussed above to his/her individual situation, he/she is encouraged to consult with the
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public accounting firm and no portion of the blog content should be construed as legal
or accounting advice. A copy of the BigFoot’s current written disclosure statement
discussing our advisory services and fees is available for review upon request.