Fintech executive, writer, math geek, and investment systems developer. Founder and CEO of Altruist and Founder of FormulaFolios.

Thanksgiving Week Decline and Today's Rally

Thanks to everyone who sent Thanksgiving wishes to my family and I last week – I hope you all had a great holiday with family and friends. For those busy with planning, cooking, and travel you may have missed that last week was the worst week in the stock market since 1932. As great as October was for stock investors – November was shaping up to nearly wipe out all of the prior months gains and got close to the lows for the year.

But what a difference the weekend has made.

Today the market is up roughly 3% for the Dow, S&P 500, and Nasdaq. Much of the rally coming on news from Europe that “radical” measures may be taken to shore up the shaky debt issues in Italy, Greece, Portugal, and Spain. Adding further fuel to the rally was news that holiday shopping here in the states was at record high levels.

I’m not sure if this single big day can be sustained, but for now it is welcome news for the stock market after 7 straight days of losses.

Here’s a visual of the last few months in the market with a few annotations of key levels and trends that I’ve been watching (as well as covering on my blog):

(You can see a larger version of the image by clicking on it)

As you can see – it’s really not surprising that the market has recovered some. The natural range for it to stop, gather it’s footing, and then make its next move either higher or lower is right in the 1,200-1,210 areas.

Some notes on where the market is likely to go from here to year-end:

1) The trend is still down and remains that way until the S&P 500 moves above 1,280 (another 7-8% higher).

2) In order for the market to finish the year at its high for the year it would require the best December performance for stocks in the last 80 years.

December has been a historically very strong month for stocks. I’ll be publishing more information on this in the next week, but from a seasonality standpoint December has been consistently the best performing month for stocks over the last 80 years – which is almost reason alone to not be overly bearish (pessimistic).

My take, and one that is reflected in our managed accounts, is to remain conservative but well balanced.

Taking undue risk is not wise and while there are some signs stock investments could go higher – there are plenty of risks and downward momentum that are likely to cause continued volatility and frankly, make the reward not worth the risk at this time.


Jason Wenk

Recession Probability Update - December 2011

Recession Probability Update - December 2011

Happy Thanksgiving

Happy Thanksgiving