December 2, 2012
Weekly Market Outlook
By Keith Schneider
If this month's market action felt like a visit to the dentist for a root canal without anesthesia then you are in good company as most players have not had an easy ride. However, as painful as the ride was, most US Equities Indexes ended marginally in the plus column for the month after having sustained a minus 5% drilling first.
Blame it on reactions to Hurricane Sandy, some post election blues, and concerns on capital gains tax increases. The fiscal ledge is still looming as well, so borrowing a line from the classic movie "Marathon Man" one might ask oneself "Is it Safe to get back into equities?". If one is a believer in statistics then the answer, for at least next month, is a resounding yes.
First, the vicious rally from extremely oversold levels to overbought in such a relatively short period of time is actually bullish looking over the next four weeks. Furthermore, the action this Wednesday where the market was down almost 1% but closed strongly has shown a very positive bias over the next several weeks as well. And if that is not enough evidence, additional factors weighing in is a strong seasonal bias. When the market is up more than 5% or more going into December, over 90% of the time it follows thru in a big way.
Other positives are improvements in market phase and institutional accumulation. If the market stays true to form, it will climb up the fiscal wall of worry. However, caution is warranted so fasten your seat belts as we are in for a bumpy ride regardless of the destination.
This week's video will highlight some short term price patterns in the key indexes that are worth noting as we go into next week, as well as our usual fare.
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