fbpx

The Holiday Season is officially here. The tug-of-war has begun.

Often, the Holiday Season brings a Santa Claus rally. Between now and Christmas, it’s common to see stocks rise as consumer spending drives the retail sector of the economy.

Not surprisingly, 2022 may buck the traditional trend. While the news narrative post-election seems to be improving, there are still a lot of structural concerns under the hood of the markets. And a Holiday-shortened week often exacerbates these.

The tricky part about a shorter week is that volume tends to drop. On the surface, this may suggest things should be calmer. In practice, this is often not the case. With fewer participants in an auction, it can be easier to push one direction or another based on the aggressiveness of the buyers or sellers. In effect, there are fewer opinions to balance things out. So you can get more exaggerated directional moves.

The setup remains precarious. Stocks in general had a strong October rally. It seems the news cycle has somewhat shifted from ‘maybe a recession’ to ‘mild recession’ now though. So volatility may stand to rise. The VIX continues to hover around 23. This value has been a tell for market reversal several times this year (and if the value of the VIX drops below 20, the probability of a market decline has been almost a sure thing for most of 2022).

Don’t look to guess the numbers right as to where this market is headed this week. It’s tricky enough just to call the direction right now. Early indicators are this thing is headed lower though. High beta stocks are pointing to significant drops at the open. SP500 futures are suggesting a drop. And, with markets closed on Thursday and only open for part of Friday, it’s likely most of the trading for the week will be crammed into the first three days of the week (the majority probably being on Monday and Tuesday).

All of this suggests a set-up for a more aggressive move this week. And, so far, that move appears to be negative.

Regardless of the market’s move this week, I encourage you to take a quick inventory of the blessings in your life. For most of us, it’s not perfect, but there’s a lot to appreciate. It’s not the stuff that matters – it’s the relationships. Cheers to a Happy Thanksgiving!

IMPORTANT DISCLOSURE INFORMATION

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Littlejohn Financial), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Littlejohn Financial. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Littlejohn Financial is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Littlejohn Financial’s current written disclosure statement discussing our advisory services and fees is available for review upon request.