To begin the typically bull friendly month of December, I decided early on that this month would be a tale two markets. The front half of the month providing the necessary strength to get everybody excited about the standard year end rally. And just when greed would be extending its hand for that very last dollar, the market would punish investors by pulling out the rug, creating a second half of the month downdraft.
Instead, the market has decided to turn into a swindling thief of sorts by turning this well thought out scenario of mine on its head. The market has not started December on a positive note, insisting on greeting market participants as if they have no rights to any further riches that it will provide. This type of obnoxious trickery at the hands of the market has led me to believe that the scenario I envisioned to start the month will work in reverse. Instead of witnessing a second half swoon, we should see a second half rally. Enough of a rally, in fact, to take the S&P 500 up to 1820 to close out the year.
Despite what you may hear, there is still too much money that has missed out on stocks. Instead choosing to be stuffed into any other asset class, namely of the fixed income/money market variety. That money is looking for an entrance into this market. Any type of rebound into year end will cause it to chase as the belief that 2014 will start strong is already deeply embedded in the psyche of the investor class.
With a January rally being a high probability event, I simply don't believe for a second that the markets will allow investors a comfortable buying opportunity into the final weeks of trading for 2013. Any continued weakness from here makes the buying opportunity in anticipation of a January rally overly-comfortable, if that makes sense. In other words, the market is making it too easy to take advantage of that high probability/profitability event.
With that said, what we saw today should be the extent of it. We could see some slight weakness into the end of this week. However, come next week, the tune of the markets should change from bearish to decidedly bullish.
Let's see what the river card brings.
