The S&P 500 fell for a third consecutive week, closing at 3844. On Monday all three major indices sank to their lowest closes in six weeks and Tuesday was flat. Wednesdays better-than-expected December consumer confidence data jumped to its highest level since April, fueling bullish sentiment and the S&P 500 jumped up over one percent. However, selling resumed on Thursday with the S&P 500 breaking below the 3,800 level on an intraday basis and unwinding all of Wednesdays gains. Fridays open marked the beginning of the Santa Claus Rally period which covers the last five trading days of December and the first two of January. Since 1950 the average S&P 500 gains during this period are a respectable 1.3%, up ~80 percent of the time. However, when it is down, it can be an indicator of more bearish news. A 4.0% decline in 2000 foreshadowed the bursting of the tech bubble and a 2.5% loss in 2008 preceded the second worst bear market in history. While no one can predict the future, were inclined that next week, the last trading week of the year, might have some selling tied to Tax Loss Harvesting. Since this has been a bearish year, it entails selling stocks at a loss (ex. Micron) to offset gains. Then, if you wanted to, you could buy a similar stock immediately (ex. Nvidia) or wait 30 days to repurchase the original stock to preclude a wash sale. We might also see some additional pressure on selling as fund managers may not want certain stocks (Tesla, Meta, Zoom, Peloton, Carvana) showing up on year end statements. For TSP TIPS, well stick with our current allocation but stand by for a third December investment mix on Wednesday evening for execution by noon on Thursday, if needed. Lastly, we wish everyone a very Merry Christmas!!
The S&P 500 fell for a third consecutive week, closing at 3844. On Monday all three major indices sank to their lowest closes in six weeks and Tuesday was flat. Wednesdays better-than-expected December consumer confidence data jumped to its highest level since April, fueling bullish sentiment and the S&P 500 jumped up over one percent. However, selling resumed on Thursday with the S&P 500 breaking below the 3,800 level on an intraday basis and unwinding all of Wednesdays gains. Fridays open marked the beginning of the Santa Claus Rally period which covers the last five trading days of December and the first two of January. Since 1950 the average S&P 500 gains during this period are a respectable 1.3%, up ~80 percent of the time. However, when it is down, it can be an indicator of more bearish news. A 4.0% decline in 2000 foreshadowed the bursting of the tech bubble and a 2.5% loss in 2008 preceded the second worst bear market in history. While no one can predict the future, were inclined that next week, the last trading week of the year, might have some selling tied to Tax Loss Harvesting. Since this has been a bearish year, it entails selling stocks at a loss (ex. Micron) to offset gains. Then, if you wanted to, you could buy a similar stock immediately (ex. Nvidia) or wait 30 days to repurchase the original stock to preclude a wash sale. We might also see some additional pressure on selling as fund managers may not want certain stocks (Tesla, Meta, Zoom, Peloton, Carvana) showing up on year end statements. For TSP TIPS, well stick with our current allocation but stand by for a third December investment mix on Wednesday evening for execution by noon on Thursday, if needed. Lastly, we wish everyone a very Merry Christmas!!