Giving Even Odds on a Holiday Rally

Merrill Lynch sees a questionable December

Investors wishing for a slightly less-awful portfolio for Christmas have just a fifty-fifty shot despite the fact that December is traditionally a good month in markets, according to Merrill Lynch strategist Mary Ann Bartels. She writes:

... S&P data shows that, despite the fact that December and January are historically the two strongest months, investors should not count on a Christmas rally. Using the index’s behavior from the Friday before Christmas to the Friday after New Years as a guide, there have only 13 holiday rallies over the past 25 years. In the last eight years (2000-2007) there have been four rallies.

What to watch for:

A base often takes months to complete, can involve multiple tests of the lows, and requires patience. A decline by the S&P 500 back though 840-815 would open the door for another test of 740-700 and perhaps 679-658. As for resistance, the dominant post-May downtrend line is crossing 1158 at the rate of a bit more that nine points per week. The top of the post October base provides first resistance at 1000-1050; second resistance could be as high as 1200-1325, which represented support prior to September’s breakdown.

Comments

[Prudent Man...:]

So what? What a dumb article.

Where is your crystal ball? Too many frauds and not enough brains are talking investments that they are clueless about.

Tell me when an ETF sponsor or money market explodes which will be happening soon.

2008 Dec 22 06:51 PM

[macsmart:]

PGP is exploding.

2008 Dec 22 06:59 PM

[Big K:]

I'm betting on a big "NO" to a Santa rally this year. In fact, the smart money is in treasury bonds. Stocks are a rip off. CEO's are grabbing the money and running. Duped investors are finally starting to figure this out, hence the big decline in market averages of late. Much more to come, and if you are still in stocks, fasten your seat belt. You have a long way to fall.

2008 Dec 22 09:40 PM

[LilBob:]

And tomorrow my weatherman says to expect a high of 28 degrees with a 70 percent chance of snow, ergo the market will... This article is ridiculous. We predict the weather by what's happened in past years, not the stock market. This is a perfect example of how economists get too caught up in playing with the numbers and begin to lose touch with reality.

2008 Dec 22 10:27 PM

[Ermolai:]

No wonder that magnitude of market decline was such a surprise, when strategists such as Mary Ann Bartels do their “strategizing” base on such nonsense!

2008 Dec 23 01:46 AM

[Moon Kil Woong:]

Wow... I'd comment except for the fact I'm puking in the toilet about now. And you say the auto workers are overpaid? I think I'd start with Wall Street analysts like Ms. Bartels.

2008 Dec 23 03:52 AM