I'm not sure what "seasonality" really means fundamentally. I know that everyone knows that the market is going up because of it.
In the past 9 trading days we have gone up 19% on the nazdaq and 18% on the SPX. That is a good year, let alone "season" for any market.
By comparison, the rally in the SPX off of the Sept 21, 2001 lows was in the vicinity of 24%. I think it is safe to say that that particular exogenous event was more significant than our current conditions. The rally in the naz off of the sept 21, 2001 lows was in the vicinity of 50%. But I think that the exuberance got way out of hand on the upside.
For comparison, the rally from the the Oct 1995 lows to the April 1996 highs was a 25% rally. That was pretty much the start of the mania. And I should point out that the rally didn't really start until January 1996. This was also the case in 1997/1998 where the Oct 97 lows lead into lower lows in January 1998. Obviously the 2000/2001 season was also negative. The 94/95 season didn't hit bottom until December. The 93/94 season had lows in November. The 91/92 season didn't start ramping until late December. And the 90/91 season moved up a tad bit into December, but didn't really take effect until December.
My point is, that when you look a little closer at the "season" it is just a general guideline. For the most part, you are better off waiting for January to catch the move. And at this point, we have pretty much exhausted whatever rally was due us in a raging bull market.
The fact that every other word out of the mouths of the clowns on CNBC makes me suspicious of the rally in the first place. This coupled with the fact that the structure on the charts is the same as previous bear market rallies that have topped out at about this percentage move and that we have clear distribution as evidenced by the tick and trin action today, tells me that it is suicide to go long here.
Of course, I wish that I had waited to go short, but that's the breaks. |
