Due to the Christmas Holiday, this week’s update is an abbreviated version. We’d like to wish all our readers a very Happy Christmas.
It’s been another excellent week for the LS Trader System, which has just hit a new all-time high as of the close on Friday 24th December and is up 81.85% this year to date. Note: Past performance is not a guide to future performance. Future results may be higher or lower than past results.
The Dow 30 printed a slight new all-time high but has once again failed to reach the 20,000 level and has continued to trade in an extremely narrow range. This kind of volume and volatility compression is normally the precursor to a large move. If the market can’t break 20,000, it will likely move sharply to the downside. Whichever way this market eventually breaks, the resulting move may be swift. However, it’s important not to read too much into the lack of volume due to the seasonal period and the fact that most traders are in holiday mode.
This is seasonally a very bullish time of year. The oft-mentioned Santa Claus rally runs, based on the data, from the 22nd (last five trading days of the year), through to the first two days in January. The first of those two days has seen the market close flat at 2260, and we did not see new all-time highs this week in the S&P 500, but we did get a slight new high in the Nasdaq 100. If the rally is to materialise next week, last week’s lows need to hold, and the market should grind to new highs. A break of last week’s lows may lead to a move back to the 50 day moving average before the rally resumes next year.