One of the big dangers near the end of the year is that the Santa Claus rally action tends to create some complacency. Traders can become downright euphoric over some of the action and can be caught by surprise when a swift reversal occurs. A good example of that today is NVIDA (NVDA) , which had an upgrade and a gap-up at this morning's open only to drop several percentage points.
NVDA isn't the only thing acting poorly. Nothing that performed well yesterday has managed any decent follow-through. Northern Dynasty Minerals (NAK) , which led small-caps yesterday, never managed to make it into positive territory today.
At this time of year, we don't have dip buying working in the same way. There is a much greater tendency to sell and not rush to re-enter. There are wash-sale issues, and also many market players are looking to start the year with a clean slate. I know I am psychologically inclined to hold very little into the new year simply because I like the idea of a fresh start in the new year.
The good news is that this shake-out should give us some setups, but the bad news is that the last few days of the year are more about positioning than charts or fundamentals. I'd be much more inclined to do some dip-buying right now if it wasn't the end of the year this weekend.
A couple of names on my radar are AK Steel (AKS) , which was looking ready to break out this morning before the market reversal. Sino-Global Shipping America (SINO) had an interesting news item this morning, and I'll be watching to see if it can regain the early session highs. I have some S&P Biotech Bear 3X (LABD) and ProShares UltraShort Russell 2000 ETF (TWM) and may add if we don't see some bounce soon, but this is not a market that is going to be very easy with volume so thin.
