We are now officially into the holiday season and many traders and institutional investors will be taking a break from active trading. There was a lot of volume last week and Friday saw some of the heaviest volume of the year as selling pressure pushed the S&P 500 into the red with only 8 trading days left to the year. And there is no shortage of bearish charts.
The Dow Jones Transportation Average is one such chart. It struggled all year and last week plunged to its lowest level since October of 2014.
It should be obvious by now that market character is changing. Friday's carnage was at least in part driven by news that the Bank of Japan plans to purchase JPY300 billion worth of ETFs starting in April of 2016. Over the past few years, stimulus measures by global central banks have been cheered; driving indexes higher.
Not this time. Japan's Nikkei fell like a stone on the news, diving about 1.9% while the yen soared 1.1% against the dollar. This is a notable reaction that suggests sentiment is turning negative on continued central bank intervention.
With the end of 2015 in sight, we are now in one of the most seasonally positive times of the year. And that historically positive bias is the closest thing this market has to a sure thing as you can get. Of course, it's not written in granite, but it's generally silly to fight the odds of a rally.
Still, for planning purposes it should be understood that Santa's failure to deliver tends to precede bear markets. So let's hope Santa arrives soon. Otherwise, it could be a tough year ahead.
The Dow Jones Transportation Average is one such chart. It struggled all year and last week plunged to its lowest level since October of 2014.
It should be obvious by now that market character is changing. Friday's carnage was at least in part driven by news that the Bank of Japan plans to purchase JPY300 billion worth of ETFs starting in April of 2016. Over the past few years, stimulus measures by global central banks have been cheered; driving indexes higher.
Not this time. Japan's Nikkei fell like a stone on the news, diving about 1.9% while the yen soared 1.1% against the dollar. This is a notable reaction that suggests sentiment is turning negative on continued central bank intervention.
With the end of 2015 in sight, we are now in one of the most seasonally positive times of the year. And that historically positive bias is the closest thing this market has to a sure thing as you can get. Of course, it's not written in granite, but it's generally silly to fight the odds of a rally.
Still, for planning purposes it should be understood that Santa's failure to deliver tends to precede bear markets. So let's hope Santa arrives soon. Otherwise, it could be a tough year ahead.
