According to Stock Trader’s Almanac, Santa has so far failed to rally this new year with new beginnings. The conclusion is important coming off a historical run higher in the indices since the end of October.
This is the first of three indicators used in the almanac in January to gauge current year strength. It has a really good track record.
The failure certainly upsets the apple cart for a smooth year, according to historical data.
I wrote in December about this difficulty setting up for January and the pullback that would result. I applied my own analysis using other indicators to point to it. When things line up, I pay attention.
In my Telegram channel before the cash open on Dec. 20, I wrote that the VIX is low enough and my concern was for January. That very day, the VIX rallied 9.1%.
And since that day, the VIX has made a typical higher swing, high and higher swing low (see chart below). This implies more volatility ahead for January, just as I scripted in December.
Where will the VIX ultimately land in January before finding relief? Time will tell, but 15, 16, 17, 18 and even 20 — 20 is considered “average” volatility of 1% moves up or down each day — are in play.
Chances are it won’t form perfectly to my drawing of the future, but odds are that overzealous bulls are about to feel some indigestion after devouring the fine foods of the holidays.
Listen, I’m not trying to be right, I’m trying to make money. I use my analysis to help me find the best setups under any circumstance.
For short-term trading, this means the strong and weak players have my attention right now…
For example, smart money has been flowing into the Energy sector (XLE) since the end of November…
Do you believe it will continue? If so, for how long?
Success is a planned event.
Think and win!
Celeste Lindman Trading
If you haven’t already, join my Telegram channel here for frequent trading insights and market musings!
*This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk.
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