Week Ahead 12/2/24 - Turkey Hangovers
Tis the Season
Historically, the stock market's performance in the week following Thanksgiving has shown a tendency for increased volatility and often negative returns. While it's not universally true that 70% of the time this period brings losses, the phenomenon is commonly associated with several behavioral and market-driven factors.
Potential Reasons for Post-Thanksgiving Weakness
Profit-Taking:
Investors may sell off stocks after a strong pre-holiday rally (a common feature of the "Santa Claus rally" or holiday optimism). By locking in gains, they prepare their portfolios for year-end adjustments.Low Trading Volumes:
The week after Thanksgiving often sees reduced trading activity as institutional investors and traders extend their holidays. This can lead to thinner markets, where price movements may amplify due to fewer participants.Economic Data Releases:
Late-November and early-December often bring significant data, such as retail sales from Black Friday and Cyber Monday. Weak or mixed results can create short-term pessimism.Seasonality Misconceptions:
While Thanksgiving week itself tends to see positive performance due to holiday optimism, the following week might experience a "mean-reversion," where markets cool off after short-term exuberance.
Okay, now to the fun
Markets down often the week after Thanksgiving, only up 30% of the time. Likely some good swing opportunities to scale into during that period if we see a pullback Will be posting some entries as they happen.
Some dark pools came into China and we saw record outflows in the sector, capitulation? The 3x China ETF YINN 0.00%↑ had some strong call flow Friday as well Put/Call: 2675/44k