We are seeing churning and choppy action this morning as the market consolidates recent gains. A few days of rest is exactly what is needed to help set up a good old-fashioned Santa Claus rally to end the year.
The key on a day like this is to stay disciplined but take the selling in stride. If you are underinvested like I am then it's a good opportunity to nibble at some new positions or to make incremental additions to favorites.
I'll be looking harder for some January effect plays the rest of the week. One of the prime areas for that is the broken IPOs that are trading near lows. I've mentioned previously is Personalis (PSNL) which has had a dismal performance this year. There isn't any particular fundamental deficiency for the action. It is just an early-stage company that isn't making money yet but has good prospects.
In addition to likely seeing selling due to tax loss harvesting, it also has an expiration of the lockup of IPO shares hitting. I've noticed that other broken IPO's such as Chewy (CHWY) has rallied on lock-up expirations and suspect that there are program trades in place that are implementing this strategy.
While the indices are not doing much today this is a good environment in which to focus on individual stock selection. The end of the year crosswinds creates some unique opportunities that savvy traders can benefit from.