When stocks rally between Christmas and New Year's Day, it is referred to as a Santa Claus rally -- but it is by no means a sure thing. The end of the calendar year is often marked by tax selling and positioning that has little to do with fundamental or technical considerations.
I mentioned last week that I was building an index short position using an S&P 500 3X bear vehicle (SPXS) . The thesis for that is that in five of the last six years, there has been a bout of selling in the final week of the year. For the last three years in a row, the last two days of the year saw selling.
Some market players mindlessly expect end-of-the-quarter markups to occur, but it isn't nearly that simplistic -- especially when it is the calendar year. There are some big gains this year, and there will be greater pressure to sell losers, but there will still be plenty of folks that use tax-advantaged accounts willing to sell some big winners before the end of the year.
Apple (AAPL) hasn't been attracting very much dip buying interest after gapping down, but strength in old-school retail names is helping to offset that and keep the indices strong. But there are some cracks appearing and I'm looking for the calendar to be a problem for the bulls.
Despite the potential pressure on the indices, there continues to be some good trading in individual stocks. Remark Holdings Inc (MARK) is my Stock of the Week, and continues to develop well. I started positions in new IPO, iClick Interactive Asia (ICLK), and low-priced AI play, Ekso Bionics (EKSO) .