Special Risk Capital Management LLC

Ditto: The “Everyready Bunny” Market Keeps On Going December 7, 2013

Not much new in here, as this market just keeps going and going.  I remain on guard for a correction / pullback since we’re hugging that upper (blue) trend channel line.  I did get a mid indicator pullback late last week, as it went from “Accumulation” to “Neutral”.  A possible precursor to a negative “Distribution”, but by Thursday of this week it went back to “Accumulation”.  Looks like the buying continues.

chart courtesy of MetaStock, used with permission; click on it to enlarge

One thing to watch for as December unfolds is the possibility of Tax Selling.  Note that this bull run started in late August of 2012 (last year).  Those fortunate enough to have gotten into the market during the last quarter of 2012 have a very nice profit.  A long-term capital gains, 15% tax rate profit (taxable accounts).  IF these folks believe that the market is headed south in the first quarter of 2014, it would make good sense to exit at least half of your profits before the end of 2013.

Bottom line is let’s see IF we notice selling in December.  If it’s heavy, that may be a warning flag.  If not, then that’s a good sign that nobody less is that sure of the first quarter of 2014 either.  All in all the US, European and World economies don’t look too bad in the coming year.  Slow and steady growth may be better that strong cyclical growth anyway.

I note that my monthly client newsletter is in the “Newsletter” tab on this site.  It contain more thoughts and sector strength data as well.  Happy Holidays !

……….  Tom  ………