|
However, the masses anticipated and expected “Santa Claus” rally, whereby Santa rides in on his sleigh to deliver the “goods”, has since come and gone without much fanfare. Thus, we ask ourselves the questions, could it be that Santa now arrives at Broad and Wall a bit early in order to secure year-end bonuses, or are we witnessing nothing more than the “prevent defense”, whereby the Fundies, both Mutual and Hedge, pull out all the stops in order to ward off any potential year-end redemptions? Perhaps neither, or maybe both. While we surely do not possess the answers, with over 8,000 hedgies attempting to pick each other’s pockets and run out the clock, there’s no doubt that much is at stake, particularly in an environment where investors continue to witness more of the same. During the past three weeks, it appears that the major averages have been stuck in the mud and spinning its tires. Yet, while things appear to be fine on the surface, underlying indicators may be suggesting otherwise. For instance, the NYSE A/D line continues to send some disturbing vibes, while New 52 week highs continue to contract, as New 52 week lows continue to expand. Furthermore, complacency reigns throughout, evidenced by the disturbingly low sentiment readings in both the VIX and VXN, obviously no one seems interested in put protection insurance, not to mention bullish advisories sitting north of 58%. Thus, the question weighing on investors and traders minds alike is, is this the pause that refreshes, before powering higher into the so-called seasonality, “January effect”, or will Mr. Market once again catch the herd leaning too far, and much like a year ago, disappoint the masses? Stay tuned, the next several weeks should prove interesting. Nonetheless, the markets continue to display characteristics of a “market of stocks”, as opposed to a “stock market”, whereby not all is moving in harmony. Over the past few years, both investors and traders have been treated to various divergences, both positive and negative, multiple non-confirmations, and a plethora of head fakes, which have produced nothing short of whiplash to those who have been caught leaning too far in one direction. And as investors are all to well aware, seldom does Mr. Market divulge his hand and accommodate the majority. Therefore, with so many unanswered questions littering the landscape, discipline, patience, and selectivity seem to be the prudent course of action until or unless clearer skies prevail. As 2005 fast approaches year end and enters the rearview, numerous predictions and projections with respect to economic and market performance for the year 2006 from various sources, will undoubtedly fill the air. While many would like to believe that they possess the crystal ball in order to garner some type of edge, ourselves included, we’ll remain content in deferring to the ultimate judge and jury himself, Mr. Market, for further clues. Will 2006 break the stalemate and produce a resolution of the two-year narrow trading range we’ve been mired in, or will we continue to witness more of the same? If only we knew! While our defensive posture remains in tact, (Cash, Gold/Silver, both physical and shares, as well as high dividend paying oil and energy issues) and is surely not glamorous, nevertheless, it has served us quite well, as we have avoided the many potential landmines that have produced some rumblings. For those who, “feel the need for speed”, just remember, as always, to identify your risk parameters and adhere to such. Best wishes for a prosperous 06”!!
CONTACT
INFORMATION The opinions of FSU contributors do not necessarily reflect those of Financial Sense. |
